I implemented a version of Karel in Alice 3, and it works great. See
http://www.horstmann.com/sjsu/cs46a/lab6/ for the code. This is something that would have been incredibly tedious in Alice 2, but in Alice 3 with Netbeans, it is pretty straighforward once you figure out your quaternions :-)
No, students don't need to know anything about quaternions. They just use the robot just like they would with Karel. Why bother? 3D is prettier, and more importantly, I already use Alice and don't want to introduce yet another piece of software.