On KT (and K4), it matches the book's language metadata to an appropriate dictionary (if there is one). Each language has its own default dictionary. Moreover, if you have more than one dictionary, and the word is not found in the default dictionary, it will 'cascade' to the next dictionary for that language. I haven't tested this extensively, but have encountered this behavior several times.
I would assume KPW will do this too, out of the box.
And yes, it is very much better than K3, which basically ignores language attributes.
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