Step 1: Recall the oxidizing nature of ozone.
Ozone (\(O_3\)) is a very strong oxidizing agent. In aqueous solution, it readily oxidizes iodide ions to iodine.
Step 2: Write the oxidation half-reaction.
Iodide ions from KI undergo oxidation:
\[
2I^- \rightarrow I_2 + 2e^-
\]
Step 3: Write the reduction half-reaction of ozone.
In aqueous medium, ozone is reduced to oxygen:
\[
O_3 + H_2O + 2e^- \rightarrow O_2 + 2OH^-
\]
Step 4: Obtain the overall reaction.
Adding the two half-reactions,
\[
O_3 + 2I^- + H_2O
\rightarrow
I_2 + O_2 + 2OH^-
\]
Thus, iodine is liberated.
Step 5: Final conclusion.
Therefore, the product formed when KI reacts with ozone in aqueous medium is
\[
\boxed{I_2}
\]
Hence, option (4) is correct.