To be fair, Injustice never dropped any definitive hints about alternate universe crap and it turned out to be the games central theme. Still, I don't think that's what we're dealing with. They've already said their primary goal with this is to leave the past plots behind, so I doubt they would shoot the plot 25 years into the future just so we can drag alternate reality versions of everyone back from the grave.
If Kung Lao's alive it just means somebody at NRS still has a huge boner for him and so they wrote a dopey resurrection into the plot. Its the same way Scorpion and Sub Zero (And Quan Chi, apparently) just get a pass regardless of how ludicrous it is for them all to have not just killed each other.
He's not all zombied out so he's definitely not on Quan Chi's payroll (unless that's his alternate) and given the obvious age change I'd wager either its a consequence of being brought back / cloned (kind of like Old Snake in MGS4) or it happens pretty immediately after MK9 and NRS just has no idea what 40-50 year olds look like.
Lets just hope it isn't as dumb as the old so-and-so's soul missed its flight to heaven and the bus broke down in Outworld so they get to fight again bullshit excuses from before.
True on the Injustice gig but that was mostly due to WB telling them "keep your mouth shut on the story til such and such" same as with MK X now, but there was heavy, heavy speculation by fans and a lot of hints from NRS when asked about it that Injustice was A. alternate universe or B. just different parts of time. Of course no doubt they couldn't "confirm it" as it would spoil the suspense and all but I think also with DC given they've done tons of alternate universe or multiverse stories it wasn't that far fetched you know? I also personally got that vibe given what Superman was doing since I read a lot of DC comics, he'd never do that normally. So I had a vibe it was alternate universe or mind control something going on.
MK X they pretty much confirmed it's the future of MK 9's timeline in various interviews since the initial launch trailer. So that being said I'd be very, very surprised if there was any Alternate Earthrealm going on, though I do hope MK does explore their multiverse which eventually I think they will explore I hope. As for resurrecting characters. Honestly, almost all fiction does it DC, Marvel, games, manga etc. Plus you know they're not going to keep Sub-Zero dead, he's too iconic to the franchise. It would be like SF killing Ken or Ryu, just can't happen or DC killing Batman or Superman. If it does happen, bet you anything it won't stay that way for long. KL however I couldn't care less about and am more concerned about him being more balanced this time to be honest. I think he looks about late 50's/early 60's plus people do age differently so I'm open to the newer look. With DC's Future's End currently it's 5 years later but some characters like Batman for example look like it's 10-15 years later. I'm sure they'll give an interesting and reasonable explanation why some dead characters are back.