I felt like Fable 2 improved on the mechanics of Fable 1, but let me list some pros and cons:
-They absolutely nailed the art style, especially with regards to weapon design and world design. Seriously, this game still has some of the best-looking fantasy weapons I've seen in a video game. When they get ornate, they get ornate.
-There's more to do here than in Fable 1. When you're evil in Fable 1, you're limited to random mayhem and sacrifices at the temple, whereas in the sequel you can run slaves, extort people, work as an assassin and partake in funner sacrifices in addition to random mayhem.
-The world of Fable 2 feels living and dynamic. Not until GTA 5 was there a game I played whose ecosystem felt as realistic. Citizens discuss random plot events, things the hero has done, the hero's appearance and the hero's alignment to one another. When you decimate a town, beggars move in. When you improve a town, aristocrats move in. Peoples' moods even change based on the town's status.
-Better combat. Flourishes make you invincible, the animations are smoother, it's easy to get headshots and mana has been done away with entirely. You could say it's been dumbed-down, but that's assuming the first game wasn't harsh. It was.
-Obviously, the sequel had better graphics than the original. Granted, Fable 2's graphics don't look that great today at all, but the art style of the scenery and items still holds up enough to keep the game from looking hideous. Comparing this to other titles from 2008, Fable 2 holds up a little better.
-Better sound design. Fable 1's generic sound effects remind me that it was a game made as the first of its series, before the devs could master their own creative themes. Fable 2 has a drastically-improved sound effect system. Every melee weapon has a different draw, sheath and blocking sound effect, as well as different sound effects for striking enemies. Some of the guns have pretty realistic gunshot sound effects (namely the Iron Flintlock Pistol, Master Flintlock Pistol, Master Flintlock Rifle and Master Turret Rifle). Every single crossbow has a different sound for the snap of its bow. Now that's just impressive. The type of shoes your character wears determines the sounds of their footsteps (For example, the knight sabatons give your footsteps a metallic clank and leather boots give them a soft thud.). The sequel's sound design shows a masterful dev team running on all cylinders.
-The trading system was improved. If the warrants were given to Derrek, I can make 100,000 gold pieces before going to Rookridge for the first time just through trading between Old Town and Fairfax and waiting a few days each time.
-Ragdoll physics. Though they look dated and awkward now, the game's early ragdoll physics were impressive for the time and a monumental leap over Fable 1's archaic pre-rendered animations.
-The humor is incredibly lowbrow at times. I was put off by more than a few puns in the sequel and its failure to take itself seriously. Fable 1, however, was serious. It doesn't feel like the same Peter Molyneaux directed the sequel. At times, the sequel is too goofy and lighthearted for its own good, especially considering the horrible things the villain (and the hero possibly) does throughout the story.
-The story wasn't as good as Fable 1 and neither were any of the so-called "boss battles". The first game feels more conventional with its tough bosses and memorable fights. The only memorable and brutal fight we get in the second game really is protecting Garth while he powers up the cullis gate at Brightwood Tower.
-There are plenty of bugs and glitches to be found in Fable 2 that weren't an issue in the original game.
-Fable 1 had the better stealing system that allowed you to get weapons and armor for free. The sequel's stealing system was reduced to petty crap that didn't get you anywhere.
-The first game's medieval setting just manages to edge out Fable 2's colonial setting, though I like both.
-I wish the Sword Of Aeons/Avo's Tear had returned in the sequel. It doesn't make any sense for them to just disappear without explanation.
-In Fable 1, you can actually be a bandit. That is, kill and rob travelers of their loot.
-The lore in the original game is still the best, especially when reading up on legendary weapons. The devs put more effort into their stories than the generic text that occupies the description of a majority of the legendary weapons in Fable 2.