Ok, out of all of the things that got me thinking about this it was Shadow the Hedgehog on the PS2. In that game in the main campaign, even though the main character was shadow, you could still pick up the second controller and play the character next to shadow if there was one. I'm thinking the same kind of thing could happen with KHIII. The second and third controllers could play the party members if you wanted to do co-op, if you just wanted to do single player, the AI would fight.