Instead of wreathing your choices in sparkles and flames, why not just present the choices without any overt good/evil alignment attached? I understand what the game was reaching for--being a ruler isn't easy, you can't please everybody etc, but I think it lessens the impact when there's a big arrow pointing down saying "this is the good choice", "this is the evil choice." Draining a lake to get resources to help fight off the incoming eldritch abomination is not an evil decision. The second half was disappointing because I could see the potential for actual moral dilemmas, ruined by the game's stubborn need to label everything good or evil.
For the most part, though, I enjoyed Fable. There were a lot of little fixes from Fable 2 that I liked, but I really appreciate that the games aren't stuck in fantasy medieval England; each successive game has the technology continuing to advance, the latest featuring an Industrial Revolution of sorts. Even if they gameplay and story isn't quite right yet I love that at the very least the civilization is still progressing.