Video is the major change-it now does transcoding-or what some manufactures refer to as upconversion-which is misleading. It mearly converts composite and s signals to componetent-for convenience.
Its other changes are in the bass managment. It is futher refined with 3 v/s 1 notch filter on the older reciever. It is much more tuneable with problem rooms or rooms with problem bass...Also, now you have the ability to apply bass at whatever frequency you wish-+ or -6db not only globally-like you can with the older one, but now you can tell the reciever which speakers to apply it to or not to...
B&K opted not to pay thx this year there stupidly high rates for their badge of approval-thus no THX logo or procesing-per say-it is not labeled as such...BUT the amps didnt change...I own the non s2 version. I just ordered to s2 version for my dad, And I am a dealer and play with both of these recievers every day...So I hope this helps...Scott