Well yeah, what I read about karma is that its something that decides your faith and luck. It's based on your actions in this life and in your previous life. It has nothing to do with how people think about you or how much they like you. Even killing a man wouldn't necessarily be bad for your karma as long as you do it with honor or out of self defence.
So maybe in contradiction to what I said myself, it could be possible. But the karma system should know why we are killing a certain person, so killing someone just because you don't like him or because you want the loot, should be bad for your karma. (Unless you killed a very rich and greedy guy and will not use the loot for your personal benefit)
Karma in "Larians next RPG" (very, very, very bored of that title btw <img src="/ubbthreads/images/graemlins/winkwink.gif" alt="" />) should be possible. But I think it should be karma as it originally was, and not some games interpretation of it. It would bother me if our reputation (or experience) would be called karma. And I'm pro hidden karma systems, we know its there, but don't know what effect it has. As a result no 2 games should ever be the same, and we will not get mad over disagreeing with larians opinion on what is right or wrong on some things. So even for Larian this should be easier to make, since they will not have to break their heads over how to deal with some situations and keeping all the players happy. I like replaying RPG's with a different type of character, and I would like it if it the game wasn't exactly the same as before. (So maybe this time someone reveals a secret that you didn't know the first time you played the game)