No, I saw on Banshee recently that Obsidian is doing something, but this is a rumor, and possibly untrue. I heard that it might be ready for E3 this year...
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That's the Episode III game - NOT KOTOR III. As of this moment, K3 is a cancelled game.
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For the umteenth time, that nasty rumor has already been dispelled by moderators/developers as 'deliberate' confusion to the Episode III game.