A few months ago I played some IWD with the 'IWD in BG2 engine' mod and I found that my party's reputation never changed (at least for the portion that I played, up to and including Dragon's Eye). It simply stayed at 12, probably due to having a Paladin as my first character.
In vanilla IWD reputation is not displayed at all, though apparently the game did have a reputation system: I just googled a bit and I found that Paladins and Rangers could fall. Either way the game is very enigmatic when it comes to aspects such as shop prices or reputation gains or losses related to certain behavior.
Now that IWD:EE is done in the BG:EE engine, which does have a visible reputation counter, I'm wondering, will our actions indeed affect reputation (shop prices, NPC reactions etc), and will we be able to see this somewhere in the character record screen?
Edit: I wouldn't necessarily mind it if reputation weren't visible, though I do think that our actions should have consequences. I didn't really like that aspect of IWD in BG. A good-aligned party shouldn't be allowed to kill Erevain for his sword without any repercussions.