"Introducing a remake of a classic. We've updated everything you love about it - including completely changing the story to include time traveling and timeline altering ghosts to provide the most fresh experience. Also we've refused to tone down the racist stereotypes and boob physics."
I don't think it's that there was demand for a remake. I think the hype was more that KOTOR was getting attention.
I would personally prefer a new game in the KOTOR series over a retelling of an existing one.
Give it to Larian Studios. If they can make a KOTOR game with the same attention to detail and narrative as they did BG3, it'll be the greatest Star Wars game of all time.
I'd rather end up with no KOTOR remake than one made by Disney. Unless Disney could keep their grubby little lore-revisionist hands out of the pie, that is.