So I finally ran into the dreaded grass glitch in Knights of the Old Republic on Taris, in the Undercity map. It basically causes the grass textures to go haywire on newer video cards. I hear it effects AMD/ATI video cards mostly; I have an Intel card myself. I tried a custom fix shown here on the Steam forums, but it did not work for me. I put the GLOveride files in both the main directory for KOTOR and the 'Override' directory, but neither worked.
Sadly this glitch appears to also be present in Knights of the Old Republic II as well. The only workaround I can tell is to simply turn 'Grass' off in the 'Graphics' menu of the game. I am frankly shocked that both Steam and GOG.com sell a game with such an obvious and basic problem. Then again, they did not make the games so they probably could not patch them even if they wanted to. What could be causing this glitch?