It's certainly not impossible. But it's unlikely simply because, for us, it's the most desirable outcome. If I've learned anything about this industry, it's that you should not expect the most desirable outcome, as business logic* is not something that is too abundant in the games industry.
* And no, I'm not talking about databases here.

I really like BaSS

The lucasarts thing is now saying there's some old republic demo on at 15:30 in whatever timezone PAX is on and that the announcement will be there. Since Bioware are presumably there, maybe its KOTOR 1 & 2 on steam, doubt it'd be GOG or the announcement of KOTOR3...
They also said that people should go if they like cool stuff given away free. Its probably not related to the announcement though, just some stickers or lame conference swag like that

*sharp intake of breath*
Yes, I understand business logic isn't too abundant in the industry, but digital distribution is almost absurdly logical IMO. Probably, all the digital distribution sites we have now (including GOG) was because of a game company's (as you put it) rare business logic.
So, let's thank Valve and Steam for being logical enough to create the digital distribution marketplace we have now.
So, since Steam was practically the grandpappy of our current favorite gaming download site (GOG), I will thank Steam by not bashing them... too much.
BJ

Knowing LucasArts's Twitter guy, he's probably throwing us all a curveball that we're definitely NOT expecting (like last time).
BJ

It definitely will NOT be KOTOR 3. In fact, they said they wanted Old Republic and its various updates to be KOTOR 3, 4, 5 etc. To those of us who avoid MMOs, KOTOR is dead.

There will definitely be more in the way of digital distribution. If I remember rightly, they said that what they launched on Steam was only the tip of that particular iceberg. But I'm not about to get my hopes to high every time Lucasarts announces they're about to make an announcement.

Makes no sense to me.. SWTOR may be an MMO, but you DO have an internet connection and it IS single player and story based. So whats wrong with it? It's not even a real MMO, it's less of an MMO that Guild Wars was even...

I'm not a huge fan of online gaming anyway. That's just a personal preference. But it's not like I'm alone in that. When you compare the amount of hours I've invested into single player games to the amount of time I've spent playing games online the ratio is massively stacked in favour of single player games. So why would I want a game I would barely play?
My main gripe with MMOs is that they're usually subscription based. Which is an automatic disqualifier for me. You mentioned Guild Wars, the sequel for which does interest me. But it wouldn't for a moment if there were fees involved.

Thats the spirit!

How many times must that line be misquoted and misunderstood? In an interview, when simply talking about the sheer quantity of content in The Old Republic, one of the BioWare guys (whose name escapes me again) said that it was like making KotOR 3, 4, 5, 6, etc., not that the MMO is KotOR 3, 4, 5, 6, etc.
That being said, KotOR 3 is dead thanks to this MMO. Not only is LucasArts putting all their Old Republic eggs in this basket, most of the story details that have already been revealed have killed off any chance of a real KotOR 3 ever happening. As far as BioWare is concerned, KotOR 2 never happened and they trampling over nearly everything that was established in that game, leaving us with no means of having a connected sequel.
BTW - Anybody recognize anything from that pic they posted? It has this weird puzzle piece thing in it that is obviously part of another pic, possibly a clue of some kind:
http://lucasartsworkshop.files.wordpress.com/2009/09/1.jpg

A red-haired elf? or is it a really wooly hat, like the one the blurry figure has?
Here's just the puzzle piece, straightened to what I believe is the right orientation, for anyone else wishing to scourge the 'net for its likeness.

So same thing, really. The bottom line is that there will not be a continuation of the KOTOR series because of this.

Could you give examples or sources that led you to this conclusion? Just curious since it would be a shame.

Got bored and finished it for you guys.

Big dissapointment. KOTOR now on digital download sites like D2D.