Keeping "one step ahead" without being "over the top" in the movie (remember they first one blew everyone away because computers weren't that good back in the 80s) - it'll be hard.
Cars now days have loads of computer processors in them and any car which needs a computer to operate an engine (ie. unhook the battery and if you can't start it, you have a robot car, technically). Some cars can even talk. But not conversational though they are working on that too. The Evolve and other projects (including DARPA) have cars that can drive without a driver. Via has mini ITX motherboards used in in-dash car computers - normal PCs that can be put in the dashboard. Not to mention the fact that you can get a conversational chatbot (zabaware.com) which can talk back to you, even with voice recognition for under $40! You could load that in one of the mini ITX in-dash computers and with a few microphones and video cameras (like the ones that replica builders use) and you have a GENUINE talking and reacting KITT!
So, for them to be "just a bit better" they may have to go "over the top" AS COMPARED TO the ORIGINAL KITT from the 80s (who, btw, didn't even have a CD player

).
Even the KR2000 movie they have some of that technology (except the stun gun of course) incorporated in it.
My idea would be to enhance KITT a bit, like for instance:
SAME voice (William Daniels) and sense of humor, but a bit more human-like, but not too much to be not the same old logical KITT we know. But a little hint like maybe hitting on (VERY BRIEFLY) ONE girl around Michael just to show him that it was KITT and NOT Michael all those years that brought KITT all the girls.

And KITT being so succesfull the girl kisses KITT's scanner and ignores Michael!

Humorous moment and just maybe KITT would point out how much better he is at EVERYTHING, even Michael's own game!

Then point out after the girl leaves the he really doesn't have no need to pursue women like Michael (who could say well, I'll just tell her and KITT say, well, you did the same kind of thing

) A little more gutsy type exchanges but only A LITTLE, nothing too far off what KITT normally is like!
KARR should be even more sinister, but in the end, end up on their side, but still dangerous as ever.
KITT should have all the forensic and medical sensors and other sensors he's always had but enhanced a little more.
He can also have Fax, internet access, access still to secret computers, ability to access virutally any computer no matter how protected, ability to make phone calls (cell or otherwise).
He should be able to electronically jam anything electrical, cars, open electronic locks. Laser to open manual operated things or cut through things.
Should have DVD, CD, Flash/memory card readers, and... a computer keyboard where Michael can even access computer-related things from within the car (why didn't they think of that in the series? They always worked on the computer stuff at the semi or offices).
And instead of a wrist watch, an IMPLANT though not detectable to human eye, that reads brain wave signals and other things to find where Michael is, and he can think instead of speak to KITT and KITT can understand him via the enhancements in the implant. Actually, stuff like that has been done - people controlling a computer via brain implant. I read an article once about a scientist that did just that. But of course it's experimental and WAY WAY off from being reality. But, because of it, it's not too unfeasable and these days with Viro chip tracking devices people might soon be able to get implanted in them (one family in Florida already has), it would not be too "over the top" if KITT could literally read Michael's (or anyone with that type of implant) mind! Though only limited as in he can't tell what they are thinking, just can listen for instructions and talk back to the humans via that type of implant. Michael would have to access KITT by specifically thinking and picturing KITT somehow even slightly in his mind. Dreams would be detected by brain wave changes so KITT wouldn't get confused over real or not real thoughts.

Otherwise, Micheal can think other things and KITT won't know unless the implant was still active. Sorta like you think about KITT, say something, the line stays open so many seconds for communcation and closes then if no other communications either way have been made. A privacy thing.

And it would of course need to have it's limitations and range in case Michael is kidnapped and then finds he's out of range to find KITT. He'd have more range than the Comlink but still won't be perfect.
Stuff like that. And yes, I agree the same Trans Am body style KITT always had should be used. And same 3-bar Vox box as well. The interior should look only SLIGHTLY different but not too different.
Would be nice. And too - KARR wouldn't have those upgrades, giving them the advantage there.
