1. Make World much more organic, and dynamic. would make exploration more fun
2. Take out quick-travelling. Too much of a temptation and makes the game much shorter
3. Introduce 2 different styles of play. The Fable 2 "light" combat system, and then have a harder, more advanced fighting system in place. Make it so that it can be switched at will, but provide bonus for those that go all the way in hard, (maybe an extra quest or two, a hidden ending, something to keep players coming back). At least bring back the magic!
4. Ensure quests are more qualitative than quantitative. Fable 3 made some progress in this, but I'd rather my quests to be unique and well written, rather then them being scaled up fetch or kill X quests. This includes any relationship quests
5. If you must keep relationships develop them much more. Give them personality, less generic voices, make them personal and reactive to the hero's actions and equipment.
6. Much preffered the visual player changes in the original Fable and Fable 2. Bring back more extreme character changes.
7. Wish the dog would also change with you. Also why not other pets? I'd rather like a cat or a parrot moreso than a dog.
8. Make equipment worthwhile getting! Make "legendary" weapons rare, make normal weapons customisable to a sense (a la Fable 2). Heck maybe borrow the weapon system from Borderlands and then you might get a much better game overall