Like, where is it in the chronology?

Blades of Avernum was released between the trilogies - Here is what I found with a quick Google search.

Blades of Avernum

Blades of Avernum is a non-canon installment in the Avernum series, released in June 2004. It comes with four pre-installed scenarios, three of which are only available after game purchase. Its most notable feature is a free scenario creation kit that can be downloaded and used to make scenarios that can be distributed to other players. It has come under fire for being "too complex"[2] in comparison to Blades of Exile, its predecessor, which used a very simple instruction list instead of a script system. On the other hand, it has also been praised for allowing many new possibilities using said script system, which couldn't be achieved with the Blades of Exile system.

Spiderweb Software has released the source code for the editor and allows others to make enhanced versions and add-ons, which a number of players have done. The most notable adaptation of the editor is a 3D editor, which allows the user to view and edit a project using axonometric in-game view.

The stories are non-canon and there is no real connection between them. You may play in any order you want.

I don't know how big are connections between the official scenarios and the main Avernum story, but most of the fan made scenarios are not connected to the main events at all.

Treat Blades of Avernum like "premium modules" for Neverwinter Nights.

It's more of a scenario building toolset with few example scenarios for reference.

Just like "mods" for Neverwinter nights. And there are couple dozens of scenarios already made by people to download :P

but yeah, whatever.

I thought the Za-Khazi Run was referenced in Avernum 4? (if we're talking canon/non-canon)