There should not be any problem with either PPP or HDLC enabled on the interface.
If MPLS is enabled, labeled packets will be encapsulated in your L2 frame, i.e. PPP or HDLC frame. Hence it is called frame-mode MPLS.
As long as both ends of your OC12 line are configured for the same L2 protocol and the interface is up/up, there is not remarkable difference between both protocols. Note, that the default is HDLC in Cisco routers, which therefore will not show up in your configuration. The L2 protocol in place will be visible in the output of "show interface".
This document is an early notification of a behaviour change that will be introduced in IOS XR release 6.5.
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