I'm hoping to catch an airasia flight from PP to KLIA, scheduled to arrive at 19:20, and another airasia flight from KLIA to Penang, at 21:15.
1) Would I have to go through customs at KLIA, or can I do it at Penang?
2) Is it realistic to think I can catch that second flight? I will have to check luggage.


Sounds very tight to me especially with checked bags. If you get though with your luggage by 20.15 you just have time to check-in, but only with about 15 minutes to spare, if check-in closes 45 minutes before the flight (is it 45min.?). I don't think Air Asia will check your luggage through to the 2nd flight.

Air Asia will certainly not transfer your luggage between two flights and will in no manner garantee your transit between flights. Their policy is to treat every flight individually.
You pay less, you get less.