This post suggests co-op mode has some serious issues that render the second player into a sub-important sidekick and involves some inconsistencies: The example in that post mentions the lack of a second set of Dweller clothings in the beginning which turns the "blend in" motivation absurd*. So are the issues mentioned (and possible other ones) bad enough to recommend not play co-op at all, or at least not during the start?
Since this sounds probably too subjective, let me rephrase the question:
For two persons who have not played Fable 3 before, what restrictions of co-op mode should one be aware of, and which of them can be mitigated by temporarily playing solo?
*)I don't know the details, since I haven't started playing yet due to this question