As I understand it, the only way to mod KOTOR on Xbox is to softmod (or hardmod presumably) your Xbox and then copy the files into an override folder that you create on the Xbox hard disk. But also from what I hear, a lot of mods don't like the Xbox, for example, the Xbox doesn't know how to make USM work, so the sabers don't look right.
However, I am under the impression that you can use the current KOTOR tool to mod normally, and then use the softmodding (or hardmodding) approach to make your mod work. As RedHawke said, I don't see how making an Xbox KOTOR tool version would actually achieve anything, since the Xbox doesn't have an operating system capable of running Kotor tool, not to mention the lack of keyboard, etc.
From a very quick search I found these links:
From that it seems that models don't work well in the Xbox, but everything else should.
So just use the Kotor Tool on PC for all your modding delights and then transfer the files to your Xbox when you want to play the mod. Don't try to actually mod on your Xbox.