it would be nigh-on impossible to make every character choice possible in KOTOR III, it would be daft to try. to a certain extent, canon should play a part. when you have at least four possible ending combinations, 16 (i think) if you include gender, trying to make space for all of them in one game is just not feasible, if you want to have a truly involving game, without it being unecessarily watered down.
You got 4 combinitons for Revan. 4 Combinations for Exile. Just pulls some switches on, and that is it.
Revan is LS, at least Carth is alive (Bastilla as well if Male). Revan is DS, Bastilla is Darth Lord of Sith. Exile is LS, Mical/Handmadien are Jedi. Exile is DS, Mical/Handmadien are Sith.
Remember that, in the big picture, it did not really
matter what happened to Revan. Wheter he saved the Republic or prepared for his destruction, he still fled the galaxy to battle the True Sith, leaving the Republic and the Jedi to die. This "big picture" will remain constant in K3, and no matter what alignment the Exile will be set to, he/she will still do something drastic.
The only things that matter is the small differences. Do not account for all changes, but only a couple of things. If Revan is DS, Bastilla will not be sitting on the Jedi Council. All it takes is:
[If Revan=DarkSide, BastillaOnCouncil Is Off.]
Simple. The changes ARE watered down, but are not important, and only exist to make us feel happy. For the most part, it will be a truly involving game.
And what is more involving than changing the fates of the games? Just think about it...Revan falling to the DS has a profound effect on the later games. It makes me feel proud of that, and that provides it an involvment that I do not have with other games.