But where are you going to take them ? Revan is level 20 (probably higher now) Exile is anywhere from level 28 to level 50.
You cant just erase those. Revan is no longer playable now he has his own memory back. Exile is, but only as some sort of Jedi superman.
And RPG is about growth from obscurity to something "great" even if you take Baldurs Gate I/II BG was purposely capped at level 7/8 for that very reason, to give you somewhere to go.
Now I'm not familiar with the d20 SW rules only the WEG ones. But as I understand it Yoda is something like level 14 in those rules. And there are no EPIC SW rules.
No, what KOTOR II did was weave a new story into an old one. I'm talking about a new story period with only the most scant references to the previous games.