I've noticed recently that reputation works a bit odd.

For instance, as a warrior from outlander that (almost) never fights villagers (has happened once, and I died...) and never has fought the guardians of the village my reputation keeps dwindling further down. It's now down to 3 * and I'm "hated" according to the reputation bar.

1: Does reputation have any affect what so ever?
2: Why does it keep going down just vs the village when I never fight them?
3: Are there further plans to make more use of reputation? (I think it's an awesome feature by the way)

*EDIT
And my reputation vs the empire has just barely gone down to disliked, it's nearly "friendly" which is odd considering the amount of killed imperials and raids conducted.

My mind is blown by this whole reputation thing which I didn't know existed until this post I would also like to see this used in the game far more.

From my experience at least.