I've received the clue that if I free the princess, she'll give me a reward (and an additional reward if I'm an Ace).
As best I can tell, the only way to free her is to kill the jester to get the key.
I know I'm not really the Avatar yet, but after playing Ultima IV I feel really weird about murdering some poor jester in cold blood (not to mention a bunch of guards).
So my question is: Do I have to free the princess to progress in the game, or is it an optional thing?

Yes, you must save her and the only way is to kill the Jester.

Thanks--I guess my new head-canon is that the Jester and the Castle Guards are evil doppelgangers sent by Mondain.

:D

No, Chuckles is just easier to kill, and get away with it, in U1. Plus he respawns when you leave town, just like the guards, so are you really killing anyone in this world?

Hmmm i'd say watching a bit of the Ultima Retrospective (or at least for U1), Spoony tells you specific details as sorta a adhock walkthrough for some things you'd never figure out on your own.

But yes if memory serves me right, you do kill the jester, get the key, get the princess and then... ummm... not sure after that...

Chuckles deserves whatever he gets. Swords, blasters, triangles... Be creative.

Spoony especially hates chuckles as i recall :P