I was wondering whether it would be possible to sort of make a new game on the TSL engine from scratch; removing all current dialogue, items, npcs, etc and only starting with a single module with no triggers or placeables or anything. This would ensure that there aren't conflicting scripts and such, and that the game only contains exactly what I want it to contain.

Can it be done?

yes

Edit: However it is best to start off a little smaller if you want to make a mod.

Sweet. Time to follow the ambitions i set way to high without having any worthwhile help or any experience as a modder whilst using only kotor tool and photoshop!

yes

Edit: However it is best to start off a little smaller if you want to make a mod.

Yeah I know that a total conversion is a bit much to start with. I just figured it would be easier to resolve any bugs and errors if only the stuff I made myself are there, with no conflicting material.