We're just about to start a new Shadow Rune campaign and quite fancy making it a particularly epic one. We'll be using the Lair of the Wyrm rumour cards, but I was wondering if there was any reason why we couldn't also have all 5 act I quests and then 5 act II quests?

The answer is game balance, if you run all the quests the heroes will have sooo much $$$$ to blow on all the best equipment. Also the extra shopping phases will help all the best cards become availible to buy.

All that said... The most important reason for me not doing that it would reduce the replayability of the campaign and i want as mch as that as possible

Yeah, it largely comes down to game balance with the amount of gold available and XP earned. There's a lot of factors involved.

1) More gold for the heroes = better gear

2) More XP for the players = more options for skills, but more XP for the overlord = continuously stronger deck. (This is why the side quests don't reward any XP; the only rewards are relics, gold, and special abilities)

3) The hero party can often use every relic they get their hands on, while the overlord is limited to one per lieutenant.

4) It reduces (but not eliminates) the strategy of choosing which quests to play based on preventing the other side from acquiring certain rewards.

I'm sure there's others I haven't thought about, but that's just the first few that popped into my head.