Like any mod, you can save the file wherever you want to, but the files from the mod have to be extracted TO the base folder. It may create subfolders of its own...
It all depends on where you installed Jedi Academy.
I always change mine, but I think the default is something like:
C:\Program Files\LucasArts\Jedi Academy\Gamedata\base\
(might be a "Jedi Knight") in there too, and there might be a space in LucasArts. Go to your hard drive ("My Computer") and cycle through to the folder where the game is installed, or right click on the shortcut icon that launches JA and check properties to see what folder it goes to.
The "base" folder is in your JA directory and is where all your mods go (with some exceptions, some mods prefer if you have a seperate subfolder in "gamedata" named after that mod).
From what I understand, MB2 is a "gameplay mod" plus a bunch of maps and skins. So I would assume if everything doesn't go into "base" then the "mod" goes into the mod subfolder and the rest of the stuff goes into base. Am I right, guys?
Anyway, that's general... I haven't used this mod before so it might be different. Consult the official documentation/site.