The setting of the MMO is fine, but only fine for separating itself from the previous too games. It's far too far down the road to be a conclusive ending to the trilogy. I mean, would Return of the Jedi or Revenge of the Sith have felt like it concluded the Clone Wars or the falle of the Empire if the movie was set 300 years after Empire Strikes Back or Attack of the Clones?
The only possible reason, IMO, to set it this far in the future, is to leave room for a "K3" in between, or simply because they didn't want to deal with all the problems they created by failing to wrap up the universe of Kotor1+2.
"So if you go to Washington, it's buildings clean and nice. Bring a pack of matches...and we'll burn the White House twice!"
"Nobody's talking about extermination. No one ever does. They just do it." - Magneto
"Don't solicit for your sister, that's not nice, unless you get a good percentage of her price."