I figured that completing a quest for the Temple of Baa (sigh, what a name) would result in some unwanted consequences and decided to check up on it. It turns out that it decreases reputation. I want to finish all of the quests that I come across. How can I make this reputation mechanic work for me rather than restrict my playthrough?
Reputation isn't that hard to manage. It's mostly important when you try to max out your training in Light and Dark magic, since you need really high reputation for Light magic and really low reputation for Dark magic. Fortunately, you can raise your reputation really easily by repeatedly donating to temples, so don't worry if you lower it too much. If you WANT to lower it, there are various ways to do that but I don't remember them all. One way is to cast the Armaggedon spell in a town, although I understand if you'd rather not do that.
It's definitely possible to get the highest training in both Light and Dark magic in a single playthrough.