Remember what happened to Rose in the beginning of Fable II? How she died in the castle? Well, her wish was likely, "I wish we could spend the rest of our lives in Lord Lucien's castle!" Well, her wish did, in fact come true in a horrible, Literal Genie / Jerkass Genie way. She spent the rest of her life walking around inside Lord Lucien's castle before he shot her. Your character eventually becomes king/queen and possibly spends the rest of their life inside the castle as well!
Assuming that Rose is a Hero like the player, her death via a single gunshot strikes some players as a little odd, considering how difficult it is to kill other heroes (with the player character surviving a gunshot and a fall from a window several stories up.) However, this happens after she winds the music box, which is later used to drain the 3 heroes powers. It's possible that the reason she was able to die so easily was because the box stole her hero powers. And judging from how Theresa seems to want the spire, it's possible she had the merchant lie about its properties and let Rose us it solely to give you a reason to want revenge on Lucien.
Reaver's radical change in appearance between Fable II and III makes sense considering he must have sacrificed more people to the Shadow Court in that interim, thus lowering his morality even further than it already was. As he did so, his eyes darkened, he got dark circles under his eyes (much like what happens to the player if they make evil choices), and he began to appear more gaunt. Morality physically affects all Heroes... and Reaver's a Hero!
In Fable III Why couldn't you turn the evil choices into good ones after saving Albion from Crawler? Because Reaver has left for a quest, so new industrial projects are on hold at least until he returns, which may well happen in the next century!
Why does the Crawler in Fable III suffer from such drastic Villain Decay and only attack you using Walter as a proxy? It can't assault you directly. The only "attack" it has is sending its "children" after you or corrupting someone with darkness, and likely the protagonist can't be permanently infected because they're a Hero. Note its interactions with you and Walter in the cave system — it has multiple chances to attack both of you directly, getting right up in Walter's face before he even notices, yet it never strikes out directly. It can't physically harm you, it can only hope to scare you until you're ready for infection.
This also explains why it took so long for it to attack Albion. It had to wait centuries to amass the "children" necessary to make a direct assault.
The much-exploited real estate system in Fable III and the implications of said exploitation explains Sparrow's monarchical rule quite a bit. Ostensibly, Sparrow's line became a royal dynasty because they toppled Lucifen and saved the world. But in the real world- and especially the Medieval and Renaissance world- you didn't tend to win the hand of the King's Daughter or a Crown just from saving the day; it tended to rely on a mixture of Property, Money and military/combat power to expand your grasp or at least protect your investments. By the end of the game, players have singlehandedly killed Lord Lucien — the most powerful figure presented in Albion — and have also bought up all of the property available to buy in Albion, making most of Albion's citizens your tenants and dependent on you. So with the control over combat power, property, and money you established between those two, you basically made yourself the top Feudal Overlord of Albion by the end of the game. So, if you're already King/Queen in all but name, why not make it official and give your children something to pass on?
Logan's monologue in Fable III about how Albion is his to mold and shape sounds evil at first, till you realize that his threats are actually facts based on when the Crawler arrives and slaughters all of Albion.
More specifically, that Albion is his and the people will do what he says or they will die. He's more right than you could possibly think, and NOT in the figurative sense either. It's just that he's not going to be the one to kill them.
The fight against the Crawler at the end of Fable III, where it possesses Walter and you hear the Crawler saying things in Walter's voice. Then you hear Walter say something like, "Kill me." Walter could still see what was going on, but can't do anything to stop it.
Fable III introduces the ability to play as your hero in other heroes worlds. It's strongly hinted that this is possible through some form of alternate reality travel. Also in multiplayer, heroes can have sex with each other and even have children. But if all heroes are the sons/daughters of the old hero king/queen, than they share the same DNA. Which means they are, at the very least, half-siblings if not more. Perhaps this should be put under a new category: Fridge Squick.
The main hero and their older brother from Fable III are the children of the the main hero from Fable II. However, considering your actions in Fable II, you could have any number of children (this includes after the main game when Lucien would have killed any previous children you had.) This means that either all of your children died somewhere along the line or you disowned them as none of them are ever mentioned or seen living in the castle.