Little late but I'll answer these anyway.
1. What is your favorite storyline battle in Chapter 2? Least favorite?
Favorite - The gate where you duel Gafgarion. The splitting of the party is really cool and it manages to be somewhat difficult without ever being frustrating-- it's a sweet spot that not too many FFT battles hit. I guess you can abuse rubber boots but I've never done that. And yeah the actual setting/setup for the fight is really good too. (not that frustratingly difficult is necessarily bad, but I'm not a huge fan of it in RPGs/SRPGs)
Least - The hill with the summoners right after you get Mustadio as a guest. The summoners are really obnoxious and the fight itself is filler.
2. What is your favorite Chapter 2 moment?
Probably the waterfall battle. Just a lot of activity there. Gafgarion betrays you, Delita shows up, lots of in battle dialogue. The awesome "royal blood" line by Gafgarion. The reason this isn't my favorite battle is the battle itself isn't very interesting.
3. Who is your favorite character in Chapter 2?
Gafgarion. Just a lot of good quotes and I like how he's pretty much uncaring when money is involved, but as others have said he somehow comes off as a "better person" than most of the bad guys in the game. Interesting villain. One of the only problems I have with this game is that you're unable to do things like go along with Gafgarion when he betrays the party, or try to hire him-- dunno if he would go with you if you offered him more money but I certainly could see him doing it he doesn't seem like the type to honor a contract if a better deal comes around. (probably the last chapter where this choice will be easy!)
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No problem!
This is a cute and pop genocide of love!