First, this was definitely one of the better episodes of the 1st season thus far. It was riveting and kept me glued to the TV set. Even my kids who are 2 and 3, watched in the same way I did when I watched the original back in the day.
As for the plot, I like the reference to KARR. However, lets consider this. When the original Knight Industries 2K battled KARR, we know KARR was smashed to smithereens. The car parts were toast, scanner was intact, and most importantly the central processor that housed the essence of KARR survived. However, the CPU for the original KARR would be today approximately over 20 years to almost 30 years old. Also consider that in the original episode "KITT vs KARR", the laser beam was bounced back to KARR and sent an electrical surge through KARR's systems. Undoubtedly the CPU had to be damaged in that electrical/laser surge.
Which begs a few questions. If they took an over 20 year old CPU and integrated it to modern systems, would that be a huge hinderance to this robot? We're talking programming languages, bus speeds, memory, and other technical constraints from KARR's original CPU. Secondly, if the CPU was damaged, wouldn't it make sense to transfer KARR essence to a more modern CPU? Even a low powered energy discharge can cause all kinds of problems. We're talking a laser that was designed to completely disrupt the vehicle and CPU here.
I think this is what happened. A military defense contractor probably stumbled upon this CPU and wreckage. They probably took KARR's original CPU and reintegrated it into a super computer to recompile and repair his program. Then they upgraded the program and put him into a modern CPU. Then as Graiman was created this prototype, KARR was put in by this contractor without Graiman's knowledge and it went rogue in Iraq. All the damage we saw from the bonus clips, indicate that KARR was defeated. In the aftermath analysis, Graiman discovered KARR's programming. Thats lead him to create the self destruct program. I don't see how Graiman would intentionally repair, rebuild, and reuse KARR, if he help create KARR in the first place. It would make more sense that a defense contractor tinkered with KARR, thinking they could correct the anomaly in KARR's programming.
Now we have this group intent on capturing KITT 2k3 or his files. They probably have re-created the KARR exoskeleton but need the CPU to make it all work. Some how or another either the original or upgraded KARR is going to show up. What better revenge against Michael Knight, than to destroy the son and the next version of the vehicle that destroyed him. Either way, I can't wait. But I do hope they explain if this is the original KARR or a new version. Good luck to the writers, because either way its going to be tricky.