I could be wrong, but I think they simplified a lot of the already basic systems after Fable 1. They added a bunch of new stuff in, but I know the blue/yellow/red experience for melee/ranged/magic attack stuff was new in 2. Unlike later games, I seem to recall that certain fights could even present a challenge. I'd have to replay it again, but I remember my experience with 1 being generally more positive than the later ones, overall.
I definitely wouldn't say it's aged badly against the other Fable games, at least. Take that as you will...