If you follow the river to the east, you will reach Bosten Hu (Lake). The Chinese government is apparantly trying to divert water from Bosten Hu into the dried out Tarim River. So perhaps the dam is related to this project.
Someone at Google Earth Hacks has pointed out that the white dots across the upper portion of the dam is actually a series of Chinese characters... no translation, unfortunately.
A Chinese friend of mine says this is a work slogan. The first string of characters very roughly states, "This dam is dedicated to meeting its electric production targets." The second string of characters says, "No mater what happens the workers will not lose sight of their production targets."
Writings - Misc, Dams, Info Requested 
More info:
http://www.china.org.cn/english/environment/49786.htm
http://www.china-pictorial.com/chpic/htdocs/English/content/200202/1-2.htm
http://www.chinapage.org/river/tarim/news2004.html
http://english.people.com.cn/english/200104/27/eng20010427_68770.html
Someone at Google Earth Hacks has pointed out that the white dots across the upper portion of the dam is actually a series of Chinese characters... no translation, unfortunately.
http://www.googleearthhacks.com/dlfile2298/Large-dam-near-Korla.htm