The Xenosaga series of games is really something rare in gaming these days. While the emerging trend of action RPGs and limited play time seems to really be taking hold, Xenosage provides a level of story driven turn based rpg fun that seems to be in the decline.
Having said that, Xenosaga II provides more of the same cutscene heavy, story driven "action" as the first episode. And the term Episode is completely appropriate. While not a definate requirement, having played and beat episode I definately increases the enjoyment level of the game. The references to the precursor are abundant, and some of the nuances of the story would be hard to pick up on with out at least some a priori knowledge. If you played the first one, the feeling of confusion about character relations and story direction through the first act remains, however trying to figure out what the character's backgrounds are manages to keep the game interesting.
Currently I'm almost 6 hours in, and have yet to get E.S. units (this game's name for Mechs) and there's a real sense that I'm still playing the opening. This matches up with the pacing of the first game (as well as Xenogears for the PS1) and keeps me wondering what tidbits of plot and story the next cutscene is going to reveal. Storywise, the game seems as strong as Episode I, with a real sense of being a part of a much grander scheme.
As for the mechanics of the game, the battle system is much like the first game with turnbased action and attacks built around range and element components. The system does introduce some new features too. There are now combo attacks that can be used by storing up attack points and boosting characters into position. Also new is the addition of an experience system for the Gears/mecha/E.S. units. This seems a lot more balanced than in the first game, where the supposedly overpowered Mechs were really only good for one or two battles against powerfull characters unless you were prepared to spend the time and money to upgrade them. The Battle system as a whole is more complex than the first one, yet it remains elegant and functionsl, allowing you to determine how deeply you want to delve into it's mechanics.
Overall I'd say that if you liked Xenosaga Episode I then you'll like this game equally, if not more. If you had a problem with the abundance of cutscenes in the first one, then you'll probably have more of an issue with this one. This one does seem harder than the first, and as a whole seems harder than most overpowered farmboy type RPGs but don't let that stop you from checking it out.