I believe it was reported working on Max 2015 at least, so presumably newer versions are probably alright. You'll have to try it see I guess.
As to your other questions, multiple head textures are out if you want to preserve dark side transitions, because of the way texture overrides work. You could, however, do a 2x1 texture layout (e.g. 2048x1024) if you needed more pixel density/UV space without going too crazy.
Tangent space normal maps are possible, thanks to the new model compilers, although the engine's implementation of them is fairly poor. Don't expect results on the level of modern engines.
Odyssey doesn't use spec maps in the traditional sense. The closest it comes is an alpha mask for an environment map (i.e. cube map), which is mostly for faking specular highlights and reflections on metals. You won't get much use out of it for characters, aside from maybe some shiny hair and eyeballs.
Hair planes are fine, but alpha transparency will rule out the use of envmaps, not that you'd usually want them for characters anyway, as I said.
You'd be better off asking non-KOTORMax specific questions in the general modding forum.