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Blender has built-in GLTF support, so the GLB would be your best bet. Note that the model was textured for a modern PBR rendering pipeline. KOTOR uses an extremely basic Blinn-Phong based renderer, so you'll need to convert the textures to work with that. Fortunately it's an extremely simplistic set of metals for the most part. Unfortunately, KOTOR doesn't support specular, but instead tries to fake it with cubemaps. Getting metal to look good is challenging. One other thing of note is that while KOTOR does support normal maps, its implementation is poor, so detail relying on normal maps won't show up as well. As to the use, you don't need to request permission. It's already licensed for use with attribution. That's the entire point of the license.

Broadly, you would need to: Convert the model from one of its currently supported formats to the MDL/MDX format supported by the game. This can be done in a 3D modeling program by importing the model together with one of the existing game models and making some adjustments. Change the item's item type to something else (e.g. Long Sword) by modifying the BaseItem field in the item UTI file. Here is a list of common modding tools. It isn't complete, but it's a good start. Additionally, you would need Blender, 3ds Max, or Gmax for the first part.