Few more things about Fable III I picked up:
There will be no health bar is Molyneux gets his way, instead, health will be presented more like in FPS, with environmental cues.
Also, there will be no experience points, instead your power is determined by your followers and other activities, such as getting married, having kids, etc.
The game is about touching Seriously, you can 'touch' people and then impose different actions on them, such as throwing a kid in the air, holding your girlfriends hand...or selling a bum on the streets into slavery.
Expression system, still not entirely clear on this, but giant wings burst out of your back and will indicate your morality. Not sure what they do besides that though.
Morphing weapons, discussed this above.
In other news, I find that no matter how many times I hear, the games soundtracks still gives me wonderful thrills.
I still love being evil, the one evil decision I really struggled with in Fable I was killing Theresa, I love her personality and backstory, but I also wanted the Sword of Aeons.
I do wish they had a more variable plot, like one for good endings and one for evil endings and so forth, but I can understand that, that would mean near Blizzardian development times.