Man, now I wish that Shenmue II had been scrapped for the Dreamcast completely, and designed specifically for Xbox. Surely, they wouldn't have had to cut that stuff out then.
Chapter 2 sounds really good. Also, I always found it kind of amusing that the two butchers didn't like each other. It would have been cool to have expanded on that by having a sidequest! Like Captain K Prime said, it would have been cool to have been able to get to know some of the more interesting NPC's a little better. Shenmue II seems kind of like a dumbed down version of Shenmue I in this respect.