Hmmm, I'd rather characters react towards you, based on a mixture of your reputation, consequences, actions, etc.
I don't like the sound of this system 'cos it's poorly adapted from the original concept of "karma". In fact, it's pretty much lifting a concept from a culture without much understanding.
Just a quick post, I may not be able to reply as I'm very busy.
Disclaimer: I'm not knowledgeable in Hinduism, Buddhism and the different eras of Chinese culture. Some of this stuff may be inaccurate.
The reason why "the full concept of karma" won't work in DOS2 is because of the cultural gap. It features heavily in Buddhism and possibly, Hinduism. Now, I only understand Karma in Buddhism which has the concept of "even if you've taken many, many lives or done a lot of wrong you can STILL do good and eventually find the path to redemption and forgiveness whether it be in your present or future life(life as in: reincarnation)". Buddha will forgive you and He will ask you to forgive yourself, that sort of thing.
Also, karma is not some black and white thing. It's heavily complicated. I'll just quote some excerpt : it's about cause and effect and far more.
http://www.buddhanet.net/e-learning/karma.htmKarma does not necessarily mean past actions. It embraces both past and present deeds. Hence in one sense, we are the result of what we were; we will be the result of what we are. In another sense, it should be added, we are not totally the result of what we were; we will not absolutely be the result of what we are. The present is no doubt the offspring of the past and is the present of the future, but the present is not always a true index of either the past or the future; so complex is the working of Karma.
In addition: there's the idea of retribution which isn't about people taking revenge on one another. It's about Heaven being like a live entity. Heaven or Buddha will punish the evildoer or force him to face his deeds until he repents, no matter how many lives he has to go through, or how much punishment he or she has to endure.
Whereas I get the concept that in certain Western cultures, things are much more vengeance-based? Correct me if I'm wrong. Like you're going to go for justice and you're gonna make everyone related to that person pay. As in: "mob justice", "the person is beyond redemption", "punish him, don't rehabilitate him", etc.
For me, this means a lot of people won't grasp it, unless it's thoroughly explained.