I think I'm in the minority opinion on this one but Phantasm 2 is just O.K. Yes it had a much bigger budget than the original. Yes, they upped the special effects. So what? A sequel should expand the mythos of the original film and give us more insight into the characters. [The Empire Strikes Back, for example.] It should also move the story forward. Phantasm 2 fails on both of these accounts. It simply feels like a rehash of the original. I don't really know any more about the identity of the Tall Man than I did by the end of the first film. Furthermore, the only thing that has changed about Reggie is the color of his hair.
The main character of Mike has been replaced by an older actor, James LeGros. He actually does a better job than the original actor, A Michael Baldwin. However, LeGros is a bit of a miscast. He barely looks like the younger Mike. When we see flashback scenes the discontinuity between the two is even more obvious. Oh, well.
Phantasm 2 also suffers from the same thing the Nightmare on Elm Street franchise does. The first is really great but the sequels pale in comparison. It's not that Phantasm 2 is poorly made, it's just not that interesting. The first one had an air of mystery to it. You never knew what was coming next. Phantasm 2 was definitely entertaining but it felt very predictable and formulaic.
RATING: Very Good.
For more info check out the film's entry in IMDB.