Well, I figured I had to dig out my account here to post a comment on this, since I had pretty much created it in the first place to comment on the original game :)
I, too, am a little confused by the continuity and the story, though I'm leaning a bit towards an slightly alternate-reality future, mainly because, if I'm remembering correctly,
Shichiro gets killed and your character in the first game is Hikari, not Hikaru
. In any case, Kagome is a great lead character and this is another fun game.
As to the story, spoiler time:
It's been a couple years since the first one, so I could be remembering things incorrectly, but this game felt a lot sparser in events. It seemed that most of the time I would just have a 'normal' day without really talking to any of the other girls, only occasionally getting some plot-relevant conversations. I only had one "let's go do something" event, where Chikako agreed to teach me partial differential equations in the library later (and lived up to her end of the deal). Most of the time it seemed no one was around no matter where I went in the evenings and thus nothing interesting happened. I think that's where a lot of the "less meat" feeling came from, from my perspective at least. It mostly seemed like you just did whatever you wanted to for a month, picked a partner (or not) and beat the crap out of Natsuki. I was actually left wondering if your choices and received events made any difference to who would and wouldn't agree to help you until I went through the character notes.
A second run was a little better in this regard, since I picked up some more events related to girls I didn't see much of the first time (Miyu, Sakaki). I think I ended up with three of them willing to help me on that one, but I still have to get Miyu (which is kind of funny since I picked up Miyako immediately in the first game). It also leads me to add that the story itself probably contributes to the "less meat" feeling. The plot of the first game was heavier, with some twists, ominous foreshadowing, and a tough decision at the end. This one was pretty focused from start to finish, and nothing happened to even try and change its course. Focus isn't a bad thing, of course, but there were basically no surprises. Add to that the "empty" feeling that stems from seemingly having only a handful of random side events, and the story just feels less filling.
The 'Sakura' route was practically the exact opposite of that. Much of the empty times were filled with Sakaki, so things never really fell into the "when is something going to actually happen" category (though there were still some mostly empty days, I never hit a spot where I had days of just nothing happening, so the breaks didn't become boring). It was shorter (in days spent at the academy) but a lot happened in there, and you really got a sense that Sakaki and Kagome bonded, and Sakaki's decision to go along with the plan made sense. The CGs were nice, and the ending also caught me completely off guard, which is a good thing.
I did find a few random things particularly interesting and funny, though. Miyu's character notes state "she's never questioned the role of the Academy and Section 22", which is really ironic given a good chunk of your time in the first game with her base, Miyako, revolved around poking into things and trying to figure out what was up. The Sachiko clones' comments about stealing partners and killing you for it was great, especially since my lingering impression of Sachiko from the first game was that she would try and kill me if I out-right rejected her. "Perfect Cherry Blossom" as an ending title made me laugh, too, but then I felt bad because of the ending itself :(
As to the mechanics, I think it's definitely an improvement over the first game. I'd have to go back and play that again to refresh my memory, but the most notable strategic change is that higher level meta abilities are far more practical and useful this time around. It doesn't look like the YP cost drops as you level anymore, but instead you gain more YP per round and when focusing. I think this accomplishes pretty much the same idea (making it easier to use the stronger abilities), but does make it tougher to figure out the specialties of you and your partner. You pretty much have to face them as an opponent and see what they toss out, since comparing the damage dealt by attacks can be tough when shields are up, the characters have different levels, and you're trying to bank on type effectiveness.
Physical attacks seem to do a little more damage as well, and aren't completely blocked by shields. That makes them fairly useful as decent, no YP offense. I want to say the shields are more expensive now, but in any case they seem to persist a bit longer, blocking partial damage from multiple attacks, it seems. The offensive meta, of course, is the most noticeable difference. No more multi-enemy attacks (which, given how almost all the battles end with one partner taken down, wouldn't be useful anyway), the use of abilities is far more clear (separate offense / defense categories), and pulling off a top level strike is much more practical. I was having trouble with a few battles before I noticed they were tossing those around, and my old strategy from the first game (spam first tier abilities) wasn't going to cut it anymore. Once I adjusted to make (surprisingly easy) use of them, things went a lot better.
There probably still is room for improvement, since battles are over more quickly and in some cases it can be tricky to accurately defend against taking a massive type-strong attack (e.g., the last battle). However, I think it's a significant improvement over the first one, and really needs only some minor tweaks. I guess the simplest thing would be to increase health all around, to make them a bit longer and less subject to a lucky strike. But I think defending is still kind out left out as well. The only time I really found it useful was when purposefully seeing what would happen if just my partner or just me died at the end. I'll check out normal mode later and see if it helps more there.
On the technical side, this one's running a lot better than the first one did (though maybe I ought to pull that one out and see if it goes any better now). I'm getting an error right when it starts (using version 1.2 on Windows XP, SP3), but it's just a generic "Sylph has encountered a problem and needs to close" thing and I don't see a dump file to post. This happens every time I run the game (the initial options menu loads properly, but it comes up as soon as I click 'Run game' no matter what settings I've got). However, if I run in windowed mode, I can just slide the error message off to the side and the game itself runs fine. I'm not sure if any aspect of it is missing, though -- I get sound effects, and all the visual effects and such in battles seem to be displaying properly. Saving and loading works just fine, etc. The only thing that might be missing is music, since I see that mentioned in the credits but none of it's playing. So a minor inconvenience and it doesn't keep me from getting through it.
I guess the bottom line is that the engine and the mechanics are much improved from the first game, but the actual story content is less engaging (aside from the bonus path). In all, it's still a great showing, and I'm looking forward to the next game you guys put out~
Well, I think that's enough from me. I still need to pick up Miyu, and figure out how to get the odd numbered endings (other than the obvious Ending 1). If I have anything to add after that, I might pop back in.