I decided to give the game another playthrough, this time as an evil character, to see how the story holds up. Summed up in a single word, poorly.
Admittedly there wasn't much point being evil in Fable 2 either, but at least the plot permitted your character to act however you wanted. Being an evil, spiteful character who's main motivation was vengeance was perfectly plausible considering everything that happened to your character.
In Fable 3 however there is absolutely no motivation for your character to be evil. The whole plot revolves around forging alliances and making promises to better the world, and I doubt you'd get far by slaughtering those allies or pillaging their towns. It can't even be a case of the Prince/Princess deceiving people just to get in to power as the way the story is presented, they are sincere promises.
And when you finally become King/Queen there is little reason to pick the evil choices, aside from opening up a couple of small new areas you'll be basically cutting your nose off to spite your face, as the world ends up looking like crap, shopping and moneymaking becomes severely restricted and you end up with non-stop booing and screaming sound effects causing your eardrums to bleed.