I haven't played this game myself, I bought it for my kids who have played it as good and evil, on single player and multiplayer, to the end. And having observed the story unfolding, I can't help thinking there is a deliberate insertion of political propaganda here. SPOILER ALERT! once you become King or Queen you are offered set choices; you can either dump all over everyone you ever got help from in the game and give Reiver carte blanche to exploit and devastate at will, or empty your treasury in endless do-gooding programmes. If you choose to do good most of your people will die; if you do the nasty stuff, you will get more survivors. So basically the message is there are only two ways to govern, all-out capitalist exploitation which preserves national security, or all-out liberal spending sprees which end up costing your people's lives. Who scripted this, Sarah Palin? Dick Cheney?
daz is right. i have played the game. you can quite easily be good and save everyone. it is completely up to you. that is the entire fable concept. your choices affect the world around you. for example when i became king i didn't pay for aurora to be rebuilt and because of it all the people there hate me.
if you want to save everyone and be good you have to work hard to gain a personal fortune and then trade it into the albion treasury which pay for the army. if you want to be evil you can choose all the evil choices then remove all the money from the treasury meaning that you have all the money, the army cannot be paid for and therefore everyone dies. you could do it the way you said. be good and everyone dies or be evil and everyone lives.
i didn't like the game to start with but i have now grown to enjoy it.