This would be the first semi-official confirmation that the secret project between Bioware and LucasArts is in fact a new Star Wars MMO.Reports surfaced today that EA CEO John Riccitiello confirmed that LucasArts and BioWare were indeed working on a Knights of the Old Republic MMO. Though it's been widely assumed that the developer and publisher were working on a Star Wars MMO based on the Knights of the Old Republic universe, this is the first time anyone has officially confirmed it. When contacted about the statement, BioWare deferred to LucasArts whose representatives told us that they currently have "nothing to announce" regarding their association with BioWare. Even with both parties staying quiet on the issue, it's hard to discount Riccitiello's statements regarding the new game.
Personally, I think this is the best route for them to go as the Old Republic timeline leaves a lot of options whereas putting a game (SWG) in the timeline of the original trilogy put a lot of constraints on the game and the stories they could develop for the players.
link for the source: http://pc.ign.com/articles/891/891718p1.html