Each player could have reputation tied to any particular city, better reputation with particular city, he would have some discount at NPCs, and some extra options becoming available to him at certain reputation thresholds.
There could be several ways to increase (and decrease) base reputation with specific city. Base Reputation would then get additionally increased or decreased by temporary factors like... is player member of guild that's currently ruling the city, what is players karma, is player currently citizen of that city, and so on.
Players would have different base reputation tied to each different city.
Does this idea sound appealing or not?
If cities were NPCs, this would make sense to me, but cities will be humans. As a governor, everyone who interacts with my town will have a reputation with -me-.
What I'll want is not a reputation system, but tools to deal with individuals, such as a "kill player X on sight" order to guards (which is something Wurm Online had), or, give player Y a discount in my shops, and player Z access to my crafting stations.
Would also be nice if I could set rules based simply on karma.