It never works for me. Either 1.0 or 1.0b. It works for neither version and I've tried many times. All it does for me is significantly reduces my resolution selection--none of which are the resolution I put in.
I think I also needed to follow the instructions written in this forums post...
http://www.widescreengamingforum.com/node/8561
It took a few attempts to get it to work.
Step Three
In the root game directory open "swkotor2.ini" with a text editor. Search for the following under the section "[Display Options]"...
Width=****
Height=****
Change "****" to your desired widescreen resolution.
In the same file search for the following under the section "[Graphics Options]"...
Width=****
Height=****
Change "****" to your desired widescreen resolution.
The game should now start in your desired widescreen resolution.
If you are not in your desired resolution when you reach the main menu select the 1280x960 screen resolution from the "Options"/"Graphics"/"Screen Resolution" menu and exit the game. Repeat step three and you should be in your desired widescreen resolution.