Ready to see a few seconds of Fable III in action? Ready to see Peter Molyneux and other Lionhead staff tell you how awesome it is? Check out the first developer diary of the game above.
Molyneux introduces the "extreme morph" system, which allows players to show their alignments in dramatic ways at the press of a button. His example? "You're walking along and someone upsets you.You can press this expression, and out of your back appears these huge angel wings. A shaft of light comes down and shines on you. Everyone around you steps back, and, 'Oh, my goodness!' You're showing your true character."
The Fable III peek also briefly introduces the weapon morphing system and the "touch" system, and it features several shots of people being stabbed, sometimes with interesting-looking weapons. Good stuff.