CTP2 of Velocity was announced at PDC last week - the announcement on the Velocity blog is here, you can download the bits here.
First thoughts are that they've done a lot of work since CTP1.
I installed this CTP tonight and ran up a super-quick demo, and it worked perfectly first time. And by perfectly I mean once I'd fixed my code. And by first time, I mean once I'd updated my web.config. This is good as it means all the problems were on my end, not theirs! (Same old story)
I'm going to have a bit more of a play today/tomorrow and will post some more details then. I've also got the PDC videos to watch.