Peter Molyneux has revealed a bit more about Fable 2 here. The part I found particularly interesting was mention of "... a beautiful girl who is about to be stricken by a curse of terrible scars - do you save her by taking on this curse yourself?"
From the interviews I've read/watched, it's clear that Molyneux is admirably making a didactic game. He really wants Fable 2 players to feel that being virtuous is difficult. In the case above, being horribly scarred (as a consequence of a virtuous action) would often result in even good people reacting to you with repulsion or disgust (in reality, though the consequences in the game have not been revealed yet).
I wonder how far such realism could be pushed in a game.
Acts of good are often unjustly punished. That's reality. But it is and has always been the case that most human beings do not have the wisdom or courage to fulfill justice in the face of that reality. Most of us desire justice, but we also desire comfort and to be liked by others. Sometimes we do the right thing and sometimes we do the easy thing, but few of us consistently choose the hard path (virtue).
In everything, I support holding people to high standards. But watching someone make sacrifices in a movie and making those sacrifices yourself through a game character are very different experiences. When roleplaying a character, there is always a choice of whether or not to push forward, to move on. You can wish a film character made another choice, but you know you must accept that character's action. In a game, the choice is yours and regret is a more palpable force.
I'm all for what Molyneux is doing: challenging players to live up to virtue. But how hard can he make it to be -- how much virtue can he expect from players -- before the game becomes too difficult, too realistic, for the majority of gamers? How far can such games push reality before their potential audiences shrink?
Virtue, by the way, as Aristotle defined it, is how well a thing performs the action it was designed for. A knife is virtuous if it cuts well. A hammer is virtuous if it is solid and well-balanced. A human being is virtuous if he or she loves well.