Episode 2's system is pretty different. as Sephiroth was saying, you can attack enemies in different "zones" and certain enemies have different zone weaknesses. If you attack the zones in a certain order (different for each enemy) you break their defense, and can do even more damage. certain characters can also knock enemies to the ground or bounce them up into the air, which can cause even more damage ^^. The characters can still boost like in episode 1, but now they have a shared boost gauge, which is a HUGE improvement over the individual boost gauges in Episode 1. (you can also increase the capacity of the gauge with certain items, for even bigger combos ^^) Characters can perform double tech attacks or enhanced ether spells by boosting together. Characters can also "stock" attacks, up to three at a time, and use them later (This allows a character to attack up to 4 times in a single turn) Ether attacks, as well as abilities like anti-poison, are learned by using points earned in battle to unlock them, but in this game all the characters have access to exactly the same spells and abilities. Instead of being able to switch into the AWGS whenever you want, their are now AWMS only dungeons. AWMS can unleash special attacks by stocking too, and their attacks change based on what characters you put in the co-pilot seats (the pilots are fixed)
I enjoyed the combat system in 2 more than 1, it felt like it went a lot faster than in the first game, especially with leveling up. It's not totally perfect though. The main complaint is that the characters are basicly interchangeable. The single character tech attacks from episode 1 are gone and each character can learn exactly the same spells and abilities, and most have the same fighting abilities too. For example, Jin and Kos-mos are pretty much exactly the same. Neither have elemental attributes to their attack, both of them do Piercing damage, and both of them can knock enemies in the air.
http://www.rpgamer.com/games/xeno/xenosaga3/propaganda/xenosaga3propaganda012606.html
Xeosaga 3 magazine scans!!!