Well Lucasarts may of have laid off the people who were in production for Kotor III, but I wouldn't nessarary believe what I hear. After all every thing that you hear is rumours. I mean they could be telling you this that team has been fired just to take all the fans for a ride when really they are possibly are developing Kotor III. May be they arn't but I have pretty good oath that Lucasarts will eventually make Kotor III because it's two a big of a success to completely ignore.As I said before I believe they will wait till the xbox 360 is developed and wait for a bit before any thing happens.
