Here are my thoughts on this...

You're all probably aware that Albion is another name for Britain, that its inhabitants speak in various British accents, and that the map of Albion is very similar in shape to Wales.  In Fable 1 the aesthetics such as architecture were similar to early Britain and now in Fable 2 a more "Dickensian" British aesthetic has taken hold.

So,  with this in mind where could the series go?  While looking at British history for inspiration, an exciting possible setting comes to mind- the colonial era. 

You may point out that Fable 2 has some examples of these very aesthetics so arguably we're already there.  True, but I would like to see a more Victorian setting and from a technological viewpoint, its quite clear Albion is not there yet- I see no steam power or evidence of heavy industry.

The story could revolve around Albion's expansion to new lands, possibly competing with another nation (A war between the two could be the backdrop to the main story).  The hero could start out as a penniless orphan who aspires to a better life elsewhere.  He would be one of the first to consider settling in the "New World".  He would arrive and life would be very primative to begin with, the land full of strange and dangerous new creatures.  But the player's choices will affect how the settlements expand.  The possibilities are endless really.

The setting means you could keep the adventurous, untamed environment, the ability for environments to grow and change depending on your actions while at the same time advancing the timeline.  But who knows what they'll go for! 

EDIT: Incidentally, although I think the iron age idea could work, and it's a neat solution.  I think it may just feel like too big a "step back".  I quite like the idea of new features being opened up because of being in a more recent time-period.