Not necessarily. I think the chances of Bioware doing a single player continuation of the franchise died, yes, but not Obsidian's. In fact, if the writers at Bioware are smart (and I feel they are), they will look for a way for the people here at Obsidian who are passionate about getting a chance with Kotor III to work with the The Old Republic. I can still see a real Kotor III to end the game series working, especially knowing that Drew Karpyshyn is at Bioware now working on TOR in Texas and Chris Avellone wanting to do a Kotor III.
No. Kotor is dead. There won't be another game. EA will say that it distracts from TOR. They need people to keep playing so they can rack up impressive stats and therefore attract new suckers players.
They do, however, own Bioware.