I think the main bad guy in KotOR 3 should be neither Jedi or Sith, but belonging to a different Force tradition manipulating the events of the Sith and Jedi wars so that the galaxy at large be weakened so he can unleash his or her own force.
Revan leads the Sith Faction with Exile leading the Jedi faction against this foe, but also against each other. The only way to win is that both factions need to set aside their differences and work together as One traditionof Force users.
KotOR 3: The United Force (sounds pretty cornball doesn't it)
The PC should have the option to join either faction and work withinthe framework trying to get Sith and Jedi forces to work together or betray them and join the new bugger, or set the galaxy ablaze and destroy all three factions.
Hmmm...