BioWare is not restricted on the use of all Star Wars Canon.

We've all seen and read that Star Wars: The Old Republic will hold compelling stories requiring players to choose their own adventure like the old books and Mad Libs. Unlike bad choices in those short stories though, the player choices in SW:TOR will have consequences. How all of this going to play out is yet to be seen in an ongoing MMO that stretches further than BioWares typical single player games like Knights of the Old Republic or Mass Effect.

The amount of content that BioWare must create to provide all of these options is astounding. Luckily for us(and them) BioWare is not restricted to just the content from the Star Wars movies. From their recent blog entry, Alex Freed, Senior Write and Managing Editor, explains which materials from which BioWare can draw:

But we’re not restricted to the movies. The Star Wars Expanded Universe of novels, television and comic books provides a tremendous amount of material for us to draw upon (as does Knights of the Old Republic specifically). Without the Expanded Universe, we wouldn’t have Mandalorians, a Sith Empire or even our setting’s time period! We wouldn’t know anything about the temple where the rebels hid on Yavin 4 or the names of the alien species in Jabba’s palace.

The almost limitless content is a blessing, but they also have to be careful of deviating too far afield. As Alex says "It’s easy to accidentally ruin our Star Wars “feel” by writing a story that just doesn’t seem right." so they have to be careful. Read more about the storyline creation process from Alex's blog on writing Star Wars stories. You'll also want to freshen up on their ideas for companions and class-specific quest-lines at the latest news update.