UPDATED 15TH NOVEMBER 2005
Hello I was just browsing Obsisidian and I came across this. thought you might like to read this:
More KOTOR III hints? here you go...
But while Obsidian is hard at work trying to finish up Neverwinter Nights 2 for a summer release, they're also hard at work on another unannounced project. All we have at the moment is speculation based off of some concept art of dwarves resembling those popularized by Snow White but we do know is that this new game will use Unreal Engine 3. Urquhart also mentioned their desire to do a Knights of the Old Republic 3 should LucasArts desire it in the future. I'd be surprised if they didn't.
source:
http://pc.ign.com/articles/666/666403p3.html
enjoy
-Bas