Kyro doesnt have T&L, and the legend about DX8 goes that none of the current cards (excluding GF3) can use their T&L when the DX8 vertex shader is used. Setting the Kyro2 into same line with these others. But usually game dev. seem to opt for supporting the DX7 T&L even when their game is othervise DX8 title.
Kyro3 with its T&L will indeed be interesting to see. They will propably have some issues with DX8 pixel shader... The difference from immidiate mode rendering could become a issue.