Yes but reputation is how other factions in general see you, and how likely they are to want to deal with you.

If you go around making impossible demands on other nations to avoid war, it will be seen as pretense by others and they'll trust you less. Whereas if you go around making generous offers that get turned down, they'll be a little more understanding because you were offering them something in their best interest before it came to fighting. That's why Balanced should be the dividing line. Sending over an "Accept or we will attack" on a demanding offer doesn't look like diplomacy, it looks like bullying, and other factions will be a bit less comfortable making deals with you.

Seriously, if you go asking for 5 cities, 1000 florins a turn tribute for the next 1000 turns, and offer them nothing but "accept or we will attack"... yea, I think you should get a big fat Rep hit for attacking after that.

At least, that's how it should work.