I was reading a book out loud and thought it sounded odd to pronounce as one syllable. Are you supposed to break it into two? It sounded ambiguous, as though homophonic to other words like queue.
Yup, the e in « que » is one that can be contracted and disappears entirely just like those in le, de, me, and so on. This leaves qu' exactly equivalent to k, no questions asked.
And so on. Unlike the usual « e muet », this is not even a sound that can be expanded if needed, for example to fit a melody or a poetic meter. Edit: However, according to jlliagre, it's possible to avoid making the contraction in the first place if you want to emphasize eux.
I think part of the oddness with qu'eux (which I find too) is the close acoustic fingerprint with que. Whereas que can't sit in strong, stressed places in a sentence (except maybe in « ne ... que »), qu'eux can, leading to what sounds like wrong stress and a premature end òf the sentence when the sounds are confused. Make sure you rhyme it with peu, not le.