To answer the original question, yes I believe that the new version deserves the II label.
1) Completely new graphics engine. The new engine handles higher resolution textures and supports particle effects and dynamic shadowing among other things.
2) Completely new damage model. Parts are aware of not only that they are damaged, but where that damage occurred.
3) Completely new modes of play. Although Classic remains the same MA-style we are used to, TOD is very different. Granted it is not part of the initial release plan, but the support for that style of play had to be built in to the base system.
4) Completely new physics and flight model. The engine behind the flight modeling was rewritten and improved.
The completion and deployment of just the first item in the list would have justified the II label. HTC has provided that and more. For a company with such a small development team, this was a huge undertaking and a very major set of enhancements to be released as the second version.