It's not suppose to end the Xehanort cycle, Nomura has not stated that. KHIII is suppose to end the Xehanort storyline, which he has said before. KH3D is suppose to set up everything for the conflict that is going to be KHIII, so basically the 3DS entry will most likely be about Sora meeting the real Xehanort that Ansem-SoD and Xemnes was based off of (and whom you met if you finished Birth By Sleep). So worry not, KHIII isn't going to have a new protagonist starting a new story. Nomura simply mentions that Xehanort's true ambitions will be revealed in the games ending, but that just means the players will know what is at stake going into KHIII.

I honestly can't even fathom what KH will be like after Xehanort is gone. If the series wasn't one of the biggest selling franchises for Squenix, I would almost feel that Nomura should simply end the series with KHIII.