As a short introduction for anyone who doesn't know, Knights of the Old Republic Apeiron is the upcoming 'reboot' for the 2003 game of year Star Wars: Knights of the Old Republic. Apeiron is an attempt to "remake and remaster" the original game with added content, including new worlds, missions and companions. However there has been doubt thrown into the development regarding the legality of this project and whether it will ever be completed or released. Now to discuss, is it legal?
Well, the official website for this project is already addressing this issue with the headline "WE BELIEVE SO". They refer to games such as Black Mesa, which is a remake using Half Life so this should be the same, right? Unfortunately this is not the case according to the lawyer of the creator of Black Mesa, who had the license to make this from the original creators. So this comparison is not at all relevant, unless the lead developer of Apeiron has license to remaster KotOR.
They also claim that Apeiron is legal because it is simple the "most intense KotOR modification ever", therefore it should be legal because they are using the original files, which is also 100% free for people who own a copy of the original game, making it clear that they are not looking to monetize the project.
So to round this information up, they are remastering the original content of the game to create a free 'mod' for the original Knights of the Old Republic. So after all these years of no Knights of the Old Republic III we are finally getting the Star Wars game we deserve.
It appears that the project is in a grey area claiming simultaneously to be a "remake" and a "mod". This grey area favors the case against this project because with no license there will be no game. It is because of this that I believe the developers are not far away from receiving a cease and assist, or other legal action being taken.
So unfortunately for any Knights of the Old Republic fans like me, we are going to have to wait a bit longer than expected to play a new game. As for more reading on this there is a reddit post from the "video game lawyer" addressing some more issues, which can be found here: https://www.reddit.com/r/pcgaming/comments/45xp3i/no_the_kotor_fanproject_is_not_legal_sorry_folks/