Actually, they did do one like that... they made a tv movie back in 1991 called Knight Rider 2000 where they dismantled the original KITT and made the Knight Industries Four Thousand. Which was a red firebird like this. But Michael, outraged, finds some of the original KITT's old computers and installs them in his '57 Chevy.
I had the pleasure of owning one of these cars for a few years and did something similar as a side project during electronics class in college. I had two banks of LEDs (14 or 16 per bar, can't remember) mounted to the underside of the hood with the lights traveling in toward the center and back out again. The LED bars were wired the same with one turned upside down so it mirrored the other. We hid the control box inside the front bumper and wired it up to the running lights so it was on whenever the ignition was. I later had to put it on a switch after attracting unwanted attention, a slight oversight on my part. It wasn't very visible during the day unless you were down at ground level (the bars were mounted far back to try and keep them out of the weather) but you could see it at night fairly well. I miss that car, had alot of fun with it. This pic brought back some good memories.
The Camaros and Firebirds are, IMO some of the best bang for the buck sports cars out there, I owned a V6 Camaro before I upgraded to the WS6 Trans Am and both were great fair weather cars. I don't know if the KITT lights would work on an older Trans Am, the exposed headlights would take away some of the effect. The popup headlights give the later models kind of a "soulless machine" look when they are down, it's intimidating.