Be a warning or indication of a future event.
See also: everything leading up to the big reveal in Knights of the Old Republic.
In a vacuum, 'the reveal' is big and dumb and blatantly obvious. Observe.
* The opening cutscene shows Jedi chick fighting some obscured bad guy.
* Everyone (including the 'tips and tricks' in the loading screens) discusses the big, bad wolf that was Darth Revan, and how he sort of just "disappeared".
* Your character wakes up with a nasty case of "who the hell am I?" to start the game.
* Even though you're supposedly just some scrub, everyone keeps acting like you're a big deal.
* Your character might not remember who he/she is, but they seem to exhibit near limitless potential for crazy shit.
That's not foreshadowing, that's practically hitting you over the head.
It still got me. I still loved it. I still got a thrill the second time I played through the game watching it be revealed to me that you were the big bad evil Sith Darth Revan, mind wiped and personality replaced by the Jedi council (who come off looking like horrible dicks in the game - seriously, erasing someone's mind and personality, then tossing them on a cruiser and just kind of going "bye!"? that's cold).
It was the ultimate turning point in the game, and the best part about it was that you could make a choice on how you dealt with it. You could go berzerk and make the Jedi pay for brainscrambling you, or you could continue to be an honest, upstanding Jedi and deal with the threat in a noble manner. A lot has been said about the light/dark meter in KotOR, but without a true polarizing event like this, it's just another gimmick. This event actually gave you something to react to.