I really enjoyed the moral degeneration in this piece. The character gradually sinking into depravity and madness was really neat. I appreciate that, ultimately, it was his victimization that led to him becoming a victimizer. It was a cycle of violence and suffering that reminds me of real-life abusers, and of White Wolf's Changeling: the Lost.
One thing I want to point out is that, as the narrator is unreliable, we also don't know how bad he was before the fae lady (she, by the way, also reminded me of RPG material - the fae in White Wolf's Exalted) got to him. His current morally wretched state leading him to downplay whatever virtues he once possessed. I got the feeling that his primary failing was cowardice - failing to marry the woman he had loved and stand up to her father - and, later, a lack of conviction that led him to seek out the path of least resistance - petty theft.