Each game is its own individual story, but they all take place within the same world of Albion, with each hero being in the same family. So, each story is one of its own and doesn't require one to play a previous game to know most of what's going on, but the lore is definitely consistent throughout the games. They don't retcon anything or completely start fresh. So, I would say there's somewhat of a point in rebooting the franchise. It's not like Final Fantasy in that each game is entirely independent from the last. There are loose threads that link them.Therein lies the problem. The games are so inconsistent from each other that each one could have it's own sequel/prequel. Doing anything in the setting or style of any one game would upset the fans of the other games.
The consistent move is to be inconsistent and make an entirely new game only connected to the others by sharing the same title, which I'd lean towards as the least bad option.
Be careful sir. People who play a game for 15 years often develop feelings about it bordering on fanatical. Those guys are crazy.
You also stated that Fable doesn't have much of an identity, which I also disagree with, as the three Fable games are consistent enough with one another and are the Fable experiences that most people look back on fondly. They're single-player action-RPGS with an emphasis on British-style humor and high fantasy. Fable: The Journey was a spinoff that doesn't represent the series entirely at all and Fable: Legends didn't come out, nor did it represent what many believed to be Fable. I'm not saying that creative liberties can't be taken by the developer, but both The Journey and especially Legends were pushed onto Lionhead by Microsoft when they simply wanted to make Fable IV. That's why I don't think a VR game is likely or wise. It's rumored that Microsoft bringing Fable back is somewhat of a response to PlayStation 4's success with expansive single-player console games, such as Horizon, Spider-Man, God of War, etc., and the last time Microsoft took a risk with Fable, they spent $75 million on a game that never came out.
For me, I'd prefer a reboot, but a sequel would be fine, too. I mostly just want another single-player action-RPG Fable, which is what I think we'll be getting. I think a sequel worries people for a few different reasons, chief of those being The Journey, which introduced a replacement for Theresa and kinda sucked, and Fable III, which took place in an Industrial Revolution, meaning that going forward in time would mean even more advanced technology (although the happenings of The Journey could leave Albion in ruins).
However, Fable IV could just see Playground pick a random place in the history of Albion and expand upon it. They could pick the Old Kingdom or the 500 years between Fable 1 and 2. At the end of the day, though, so much time has passed between Fable III and now that it may be best to just hit the reset button and reboot the franchise entirely. I'd like to see the Old Kingdom documented in the first game and then maybe retell aspects of the first game in the second, though they would be free to take as many liberties as they would like, since it's their game.
I'm 75% sure the next Fable will be a reboot. If it isn't, all that matter is that it's a single-player action-RPG that fits the spirit of Fable. Hoping to get some news at E3.