I think the engine itself will definetely stop after NWN2 support is dropped. But I must say, again, that I really don't feel that NWN1 was a game that worked particularly well either. I *still* have quite massive slowdowns for example when a lot of stuff is going in NWN1, and that is on a computer that by far exceeds system requirements/recommendations. There are still plenty of bugs to be found, even after the 1.69 patch. In fact, some of the tileset stuff introduced in that patch causes horrendous stutters (I'm serious here, really bad) for me in the mods I've tried that make use of them.
That's not to say that OEI should be forgiven for everything. I think they improved much upon the engine, but they also introduced problems of their own into it. But yeah, I'm always sort of flabbergasted at the comparisons many people make, because for me, NWN1 always had "messy" feel that I think NWN2 has also.
As far as the game goes though, I think there is still some life left in it. I'm not sure whether we'll see a third expansion, but it's been confirmed that Ossian has been working on something NWN2 related (aside from MoW). There are some promising modding projects still in the works as well (obviously Purgatorio, Misery Stone, Shattered Dreams, one of the Ossian members private project which I can't recall the name of plus some other stuff).
If there ever is a NWN3 I think it'd be good to see OEI have another crack at it, with another engine. I think they've been great with the community (which is important in the NWN games).