Doesn't touch the first one, but still has a few good scares intact.
The gameplay is basically like the first one, with a few minor tweaks here and there. You still have the Camera Obscura and it still has the magical ghost capturing powers. The things that have changed mostly have to do with the camera and they are worse. Things that were standard in the original, like showing the health bar of the closest ghost, now need to be found or purchased to be used and it's very bothersome. If you are used to the first one, prepare to learn it all again because the viewfinder looks completely different. It's hard to tell when your camera is charging up because it just sort of lights up, whereas in the first one, you could tell by the sound and the symbols shooting onto the screen. Also, there were way too many lenses and upgrades in the game. It might just be me, but a lot of them weren't needed and I did fine throughout the game without using most of them at all. But if you can get used to the changes, you should have no problem picking this game up. Another complaint of mine is the actual combat with the ghosts. In the first game, it was usually only one ghost attacking you which led to some extremely tense fights. When they went in the wall, you would constantly be searching around looking for them not knowing where they were going to pop up. Not to mention that the majority of them had some speed which made combat more difficult and ultimately more fun. Well, in this game the battles usually consist of multiple ghosts who are incredibly, and I mean incredibly, slow. There is nothing tense about almost every fight in this game because you can just stand there, line up both of them, and shoot away to your heart's content. In this regard, the game is too easy and it's sad to see that the once scary and incredibly creepy ghosts are now just laughably simple. My only other complaint is that Mio moves very very slow. She moves at about the same pace as the character did in the first game, but it's more noticeable in this game. In the first game, you would be tense just stepping into the next room because it was unique and you didn't know what was going to happen so the slow movement was almost welcomed. In this game, it's mostly clear when ghosts will pop out at you so you will run throughout the game and the ridiculously slow movement will have you pulling your hair out. But overall, the gameplay department isn't much different than the original, so if you played that and enjoyed it, you should have fun with this game too. The scares are still there, but there are much less and they are few and far between.
The graphics were very good. The ambiance is still top notch in this game. You will still find yourself looking at the environment more than once gazing in awe at the little details strewn throughout to make the game that much creepier. Although I don't think that the environments were as scary as the original, they are still very good. The character models and cutscenes also were very good. It wasn't the best set of graphics I've ever seen, but it did it's job.
The sound is just as good as most other horror games out there. For horror games, sound is a definitive part of it. If the sound sucks, it's hard to make the player scared with just visuals. The sound, or in this case sometimes, the lack of sound, was top notch and very creepy. My only complaint is that the voice acting wasn't very good. Yeah, they sounded like girls, that's always a plus when the character is a girl, but if I were in this situation, I would be freaking out like no other, so I would have liked to see a little more personality in the voice acting.
Overall, if you liked the original, you should whole heartedly enjoy Fatal Frame II: Crimson Butterfly. Not much has changed in the actual gameplay or story, but unfortunately the small changes they did make seemed to be a step back from the original. The scares aren't very abundant if you've played the original Fatal Frame. I know personally I wasn't phased by seeing a ghost looking at me in the corner anymore simply because it was so over used in the first game. If you love horror, I say definitely pick this game up. Even with it being disappointing compared to it's predecessor, it's still a great ride and something that every horror fan should play.