Better than Arc the Lad 1, and a whole lot more of it in comparison.
However, the problem with this game is that the gameplay, while deeper and improved, still becomes really repetitive [especially in comparison to modern strategy RPGs]. The job system in the FF Tactics games at least kept things relatively fresh, but these characters just remain the same. And the combat music is rubbish - maddening flute riffs which will burn into your brain. To compound the slow pace and tedium of the battles is the fact that this game is about 4 or 5 times as long as the original. Preparing for the final boss fight can be a chore in itself, particularly when it is much harder than anything you'll face in the game itself. Converting a saved file from Arc the Lad 1 makes things significantly easier. By the end of it I was just playing because I wanted to see the ending.
That said, Arc the Lad 2 is good enough in most respects to warrant playing if you're a fan of the genre. While the gameplay holds up badly, the story-telling is of a high standard. The Working Designs translation in the Arc the Lad Anthology on the whole is highly impressive [adding cutscenes etc.]. It's worth playing if you need another strategy RPG and are more interested in stories than gameplay.