I think a lot of the people pining for Fable TLC do so more out of nostalgia than objective analysis and comparison. Don't mistake me, there were certainly some things in Fable TLC that were better than in its successors. The ability to pick up any item you saw lying around, the lockpicking, a few of the spells that went missing, the greater diversity of creatures and regions, and for me the time setting.
There were also many areas in which the subsequent games improved vastly upon Fable TLC. Both Fable II and Fable III had much larger regions (though expanded versions of regions like THe Northern Wastes should have been present), more customization (except for the armour), Fable II offered more spells and replayable missions, and Fable III offered the best couch co-op I can recall having seen in a game.
For the most part, Fable II and III kept most of the charm, the brothels, the humour, the wonder, and most of the positive aspects of the series. They did make a mistake in not keeping the controllable expression wheel in Fable III, and in scaling back on the number of spells while forcing the player to wear the disgustingly superflous and demeaning gauntlets. Also, there should have been MORE lore, MORE magical creatures, good and evil alike, MORE regions that were all larger etc. But the notion that either Fable II or III "ruined" everything good about Fable (TLC), or that they didn't add anything to it, is just foolishness.
Also, I cannot sign on for the camp that wants to make the games exponentially more difficult. Insane difficulty for its own sake, or for bragging rights, is the obsession of hardcore gamers (and not all of them). The creators have often said they want this game to be accessible to casual gamers. Sure, the game should have a good amount of difficulty at lower levels, and some enemies should be reasonably challanging even at high levels, but encounters with those high level enemies (like trolls, demons, perhaps someday benevolent fairies/spirits for evil player/characters, dragons, kraken etc.) should be fairly rare (not unique, and not non-respawning, just more rare, and not commonly found outside of certain regions). There is no point in becoming an epic superhero if you still have to virtually kill yourself to fend off a couple of bandits. The thing that makes so many people fed up with Elder Scrolls is the crazy scaling, which makes all of your advancements seem superficial, because the tougher you become, the tougher EVERYTHING becomes, to the point where you don't seem to really be progressing. Some people say they shouldn't have to pass on taking new powers just to be constantly challanged at every turn. . . OF COURSE YOU SHOULD! Why would you keep enhancing your powers if you don't want to be exceptional??? An archmage is not supposed to have to seriously worry about getting his ass kicked by a local hedge magician or a common thug, and a Herculean warrior should not have to fret that a couple of brigands are going to hand his ass to him. A wraithking or a troll might best those mighty persons. . . but trolls and wraithkings shouldn't be lurking behind every tree in every forest. If you want to be a legendary wizard/warrior, then don't complain about being mightier than the average menace. . . if you want every fight to feel like it could easily be your last. . . then stop snatching up every superpower you can get your hands on.