Plenty of shows get put into production and never see the light of day, despite that I think we will see a Book 4. My only worry is that without Nickelodeon behind it, the amount of money put behind it will be greatly reduced resulting in a major drop in quality. We'll have to wait and see.
Also, I believe that drop in ratings between seasons 1 and 2 to be the result of three reasons:
1. The year long gap between seasons.
2. Insufficient advertising.
3. The deadly 8pm Friday night time slot.
As far as the rest of season 3 goes, Bryan Konietzko posted this on his tumblr page:
But as I said elsewhere, while it's good that we'll be able to see season 3 conclude in some format, it kinda sucks for Mike and Bryan. I mean they pour their hearts and souls into this series to see it jerked around by Nick to the point of near cancellation and mere online releases. Must make them feel like crap.
EDIT: Michael DiMartino has just posted this on facebook:
"Hey everyone! I appreciate all the support for the show and share your frustration. But the good news is, you will be able to see the rest of Book 3 of Korra, I just don't know all the details yet. And there is most definitely a Book 4. All the pre-production is done and Studio Mir is hard at work on the animation. So this was a disappointing development for sure but as long as you all are able to see the show in some capacity, I'm grateful. And honestly, you're all watching it online anyway, right?"