Yes, you first kill somebody. Then, you dress them in strange robes and costumes, and hand them a red lightsaber. You give them a coke to drink, and there you go -- good as new.
Just remember to feed them Force sometimes, there's many mouths/Siths to feed.
Also, the best way of killing them is typing /disco and /kill in multiplayer alot.
"It's Jango Fett! And he's brought his head!"