Peter Molyneux, the soft-spoken leader of Lionhead Studios, has always dreamed big. Always quick to take advantage of evolving technology, he’s proven that with each game under his studio’s belt, he’s been inching ever-closer to his lofty ambitions. The pieces largely came together for Fable II, the Xbox 360’s biggest role-playing game and Molyneux’s most unqualified success yet. In a way, it’s permitted him to dream larger than ever.

So what’s his grand idea for the third Fable adventure? Simple: Molyneux wants you to touch people. Whether or not all this touching involves the 360's upcoming Project Natal hardware add-on remains to be seen, but yes, pulling RT on your controller will extend your hero’s hand and allow him to interact with the world around him.

“It’s not a gimmick,” he promises. “This is a really big feature.”

Molyneux demonstrates by walking his hero home, where his character’s distressed wife is panicking because their daughter has gone missing. She fears that their child’s been abducted by the soulless neighborhood industrial-factory bosses, who nab stray children and employ them against their will, placing them in direct mortal danger. Kids die daily at the hands of the evil machine, a nugget that Molyneux happily claims his team plucked straight out of British history and Dickens-era fiction for Fable III.

Fortunately, the child is found playing with friends just outside the factory. Using Touch, you wag your finger at your errant daughter, scolding her for straying out of her mother’s sight without permission. Naturally, she begins to cry. A follow-up use of Touch picks her up to console her, tossing her into the air playfully. Her mood instantly turns jovial. A third press of the trigger takes the girl by the hand to lead her home.

“We were inspired by a game called Ico,” Molyneux says, referencing the 2001 PS2 adventure in which the title character could lead Yorba, whom he’s trying to protect, through the gameworld by taking her hand.

But Molyneux’s emotion-tinged design touch enhances the mere physical act of hand-holding. On his way home, Molyneux’s hero tries to turn into a pub. His daughter resists, telling him, “You promised Mommy you wouldn’t ever go in there again!” And after depositing the girl back at home, he encounters a beggar. Using Touch, the hero extends his hand, raising the beggar’s excitement as he believes he’s going to get a handout. Instead, however, Molyneux grabs the hobo’s palm and leads him toward the evil factory, intending to sell him into indentured servitude. As they get closer, the panhandler realizes what’s afoot and his resistance increases, and by the time they reach the front door Molyneux’s hero is literally dragging him inside. The moment is as hilarious as it is potentially exciting for other gameplay scenarios.

Meanwhile, the world of Albion continues to charm, sporting a vast palette of colors, slightly cartoony characters, an appropriately sweeping musical score, and a touch of genuine British humor. The realm has been suitably upgraded in scope for Fable III, as dungeon caves are now exponentially larger and an entire new continent is available to explore. And once you overthrow the tyrant king and assume the throne yourself in the middle of the game, you’ll indeed be able to shut down the aforementioned factories and reclaim the land for nature, restoring the forests.

Another major upgrade comes in the form of the weapons you wield. Thanks to a new feature called Morphing, every weapon will be unique, changing its appearance based on how you use it and who you use it on. A sword used to kill throngs of Hobbes, for instance, will take on a serrated edge to match its victims’ scaly flesh. An axe wielded by an evil hero and used to kill innocent Albionians will begin to drip blood. And characters themselves will shift, too. Melee brawlers will grow big and muscular, gun wielders will stay slimmer, and magic users will appear frailer. Extreme expressions, meanwhile, will make your character actually sprout ethereal wings in a display of power during combat. Why? Molyneux sums it up in expressing his entire design philosophy:

“If there’s one thing we’re trying to do in Fable III, it’s make you feel powerful,” he declares. “It’s all about the power.”