How does reputation affect gameplay?
With a low reputation, NPC's will sometimes recognize you and call the police.
With a higher rep, they'll still sometimes recognize you but they don't do anything game-altering. The comments they make are different.
Source: I had very low rep from running over so many pedestrians. I got sick of people randomly calling the police on me, so I stopped a bunch of crime and they stopped doing it.
I believe it also has a minor affect on the ending, but I haven't found a source to verify this yet.