Do you remember what Peter Molyneux, Lionhead boss (because head of Lionhead just sounds wrong), said you should expect from him at X10 regarding Fable III? Correct. News that will make you "super pissed".
Well, I don't know whether he overhyped them (well, it is Molyneux, after all) or is his perception of being "super pissed" is simply uncommon, but the news he was talking about a few days prior to X10 are the lack of any health indication in Fable III - no HUD, health bar, flashes, some figure on screen (like in Gears of War), no darkening of the screen... nada. He didn't go into any specific details regarding how you will know your health status, but did say that he will be taking cues from recent action titles and their environmental (character look) changes in purpose of showing how you health is doing.
I really think he missed his mark with "super pissed" here, but this new change to the gameplay could contribute well to the feel of the whole game itself - if your ambition is to be as close to "life simulation" as you can, then this change is bound to help your cause.