Tier List
This tier list is based on Negi's AVG2 tier chart. With the exception of a couple of outliers, AVG2 is a surprisingly well-balanced game, and most characters are capable of holding their own and winning tournaments.
[Note: Characters are ordered within tiers]
BOSS: Material, Miranda
S: Kaori, Satomi, Ayako, Chiho
S-: Jun, Saki, Reimi, Yuka
A: Kyoko
B: Elirin
C: Tamao
D: Manami
Placement explanations
Below are individual explanations for each character's placement on the tier list. Bear in mind that these are just the opinions of current players, and we welcome anyone willing to prove us wrong on these assessments!
S Tier
Kaori
While most notable for her infinite, possible from a wide variety of starters (including an incredibly strong divekick and even a guard cancel), Kaori's true strength is as a zoner. Her LP Ressenshuu and crHP anti-air allow her to totally control the pace of play in a way few other characters can. It's worth noting that while she is the best, she is not a level of busted above everyone else. Her normals are kinda weak, so when forced to actually engage she can be bullied, but when she gets to establish her game there is simply no one better.
Satomi
Almost the inverse of Kaori in a way, Satomi has the best grounded normals and the best anti-airs, so her ability to decimate people in neutral is unmatched. Satomi's 5HP is one of the greatest buttons in the game and her 2HP and 3HK are not too far behind it. Her Kaenzan, specifically her EX Kaenzan, are insanely powerful anti-air tools in a game where many dragon punch-styled attacks do not have much or any invincibility.
Ayako
While her main strength is her neutral space control, her more hidden elements are what make her so strong. By using her 5LK she can lock down a healthy amount of real estate and convert off it if someone enters, and if the opponent tries to get wise and jumps, her 5HP is there to make them regret it. But in the corner Ayako turns into the scariest grappler as she has combo routes off her normal throw AND for when her throw is softened. This allows her to score unavoidable damage as any normal throw is an inevitable combo.
Chiho
Fast normals, good mixup abilities, and the ability to loop custom combo routes to the tune of unfathomable damage. Chiho is a pretty good character outside of her Zanei Jin custom combo super, but once she is able to pop it (and it's not terribly hard to do so) she can end the round if she has the right start. Her defense is a little suspect, but with such overwhelming neutral and offensive power she can more than make up for it.
S- Tier
Jun
A grappler in a game this fast paced and aerial is a scary premise and Jun brings the nightmare to life. While she has the slowest and most lumbering selection of normals, she has all of the movement options the rest of the cast have available, meaning the grappler can super jump and dash at you. She is also able to make wild conversions happen, as she can OTG after her command grab, giving her access to big damage combos if the opponent stands still to long.
Saki
A simple, yet highly effective midrange character, Saki is able to play the neutral game brilliantly with some great buttons including her amazing 5HK. What makes her a terror is that most conversions can end in her Mizuchi super, which deals stupid damage due to having fixed damage values. While she needs the meter to make this work, when she has it she can melt the opponent.
Reimi
Somewhat of a Guile archetype, Reimi is able to lock opponents down with her Burning Rose pressure and use her Hurricane Rose flash kick to punish those looking to escape. What makes Reimi so powerful is that when she gets the right hit, and has the right meter, she can start looping HK Rose Stinger into EX Burning Rose on the opponent and obliterate their life bar. While without meter some of those tools become useless (Rose Stinger is punishable on hit), she has enough of Guile's bloodline to keep the opponent in check until she stacks bars back up.
Yuka
A fairly typical Shoto clone, but in being that is greatly effective. Her DP has actual invincibility frames on it and her fireball has a great speed to let her control the neutral. She also gets access to some very rare tools, like a aerial four-chain and an aerial move that is air unblockable. While not particularly flashy she is greatly effective in her well rounded abilities.
A Tier
Kyoko
Kyoko has a bit of a terrible ground game, but an excellent air game and the only other character with an aerial four-chain. This makes for a powerful, but somewhat predictable air presence. But do not let your guard fall and allow her to hit you, because if she can convert into EX Sazanka she can do a dastardly 50/50 on your wakeup that leads back into another EX Sazanka conversion. While her tools are not the greatest, her power lies in being the only true setplay character in the game.
B Tier
Elirin
With great normals, an easily-confirmable rekka, and an unreactable overhead she can super cancel, you would wonder why Elirin is so low on this list. Sadly for as good as her offensive power is (and it is very good) she has very poor defensive abilities. Elirin can easily rush the opponent down and, with meter, set up some nasty mixups, but when the shoe is on the other foot Elirin has few responses to get herself back in the game.
C Tier
Tamao
Tamao wants to be the Ken to Yuka's Ryu, but instead she became the Dan Hibiki. Her toolkit is very much a mirror of Yuka's shoto archetype but noticeably less effective. A shorter fireball, a DP without the invincibility, Tamao has a good tatsu and access to a command grab but she lacks the solid gameplan that makes Yuka work. Tamao isn't necessarily bad, but she under-performs when compared to the rest of the cast
D Tier
Manami
A struggle of a character, Manami is heavily hampered by having just the most awful suite of normals. They have barely any range on them and she also lacks almost any defensive tools, including being basically the only character without a 0f Unblockable. She can get away with being annoying and hard to track down, but the second the opponent gets a bean on her she has so few responses that she obviously represents the bottom spot of the tier list.
Material and Miranda
Material and Miranda are the hidden boss characters of the game, with Material serving as the mid-boss, and Miranda as the final boss. Both characters are banned in competitive play, but they can be good for a laugh, so if you want to mess around with them, unlocking them is a pretty simple affair.
First, you must complete Story Mode, which will unlock Material. Then, completing Normal Mode will unlock Miranda. You must unlock the two characters in that order -- which is to say, having Material unlocked is a prerequisite for unlocking Miranda.
Alternatively, if you plan to play on an emulator, save yourself the hassle and download a save file from GameFAQS here.
Hidden Colors
Pressing Start to select a character will give you a random color, including a hidden color that can't otherwise be chosen.
How to Play Online
Join the AVG2 Discord server to get more details on setting up netplay and organize matches..
Game Versions
There are two versions of the game: the original 1998 release (SLPS-01318) and the 2003 SuperLite 1500 series re-release (SLPM-87226). As far as difference goes, they're pretty much identical besides the SuperLite logo screen in the re-release.
The original 1998 release version is the version used for online play, as it is the most easily accessible.
The game version released in the Japanese PS Store (for PS3, PSP and Vita) is the original release, SLPS-01318. It's a PS1 Classic, so it has no built-in netplay.