What a KOTOR III has to have: Either the Jedi improve instead of being the lofty, egotistical hypocrites they have always been, or they need to be the villains. You can not honestly tell me that the Jedi are the good guys after TSL, let alone their rampant inaction in KOTOR.
Also, lightsaber/blaster/melee weapon customization is a must. Unique hilts, blasters that change appearance when modified, and melee weapons that change appearance when modified.
Multiple endings, obviously.
Lots of planets. Epic scope.
A whole mess of organizations. Not just Republic/Sith/Czerka/Exchange, I mean lots of organizations with unique individuals.
All NPCs must have unique appearances. No more low poly models, or repetitions of the same NPCs.
Very diverse plot, massive amounts of side-quests.
As of 3/14/10, TSL is restored. The Sith Lords Restored Content Modification by Stoney and Zbyl has been finished and can be downloaded here