I also use the Hollow World setting, along with Mystara. Yes, it is officially part of Mystara/Known World. It's where the Immortals place the remnants of dying civilizations as a way of preserving them. There is a powerful Spell of Preservation in effect in the Hollow World, that ensures that no group there ever disappears entirely.
It's not all based on Ancient Egypt. That's only part of it (the Empire of Nithia). There are many other groups there, as well. The Milenians (based on Ancient Greece), Azcans (Aztecs), and a whole bunch more.
The sun of the Hollow World is actually a permanent gate to the Plane of Fire. There is no night, which has led the populace to be very frightened of darkness.
It's a great setting for "Lost World" style games, and I'd recommend it if that's what you're looking for. It could take quite a bit of work to convert it to 3.X, however.