First, I'll join everybody else in announcing that XP SP2 RC2 is available for download! If you've put off installing it, now's the time to give it a shot and test all of your favorite applications and web sites. Most of the work recently has been on bug fixes, and compatibility fixes in particular. If there's anything that doesn't work by now it will probably not work in RTM unless you notify both Microsoft and the vendor (or web site administrator).
Below are a few of the changes in IE for RC2 (since RC1). This list is very incomplete - I'll try to post a follow-up entry or two to cover some of the changes I missed or that are in areas I'm less familiar with.
Information Bar Updates
When the Information Bar blocks an ActiveX control, the name and publisher are now included in the warning text. If the control has a visible area in the page, similar text will also be shown in that area, and users can right-click in that space to show the context menu to install the control. This change was made to increase discoverability and help the user make a better decision about whether to proceed to the Authenticode dialog.
We also implemented an application compatibility fix to handle the common scenario where a web site detects that the ActiveX installation failed and redirects to an error page. In this case, users will be shown a version of the Information Bar on the redirected page, and clicking the "Install ActiveX Control" menu will navigate back to the page where the control was suppressed and allow the Authenticode dialog to be shown. The end user experience is not smooth, but this unblocks a large number of web pages that were redirecting on failure.
As a last resort, holding down the CTRL key is a universal workaround for pages that have tricky logic that eluded our attempts to unblock something after it's been suppressed by the Information Bar. This works for ActiveX controls, file downloads, and pop-up windows.
Other minor changes (I don't recall if these were in the last public release or not):
Manage Add-ons Updates
The Manage Add-ons dialog now shows more useful columns by default, including the name of the add-on, the publisher, and the file that implements the add-on. You can also choose to display columns for additional information such as the CLSID and the folder that the file is located in.
Pop-up Blocker Updates
Jeff Davis can detail the changes here. The primary one that I worked on was to enable ActiveX controls such as Flash launch new windows for user-initiated actions. Previously these were all blocked because IE did not detect mouse clicks or key presses within windowed controls.
New Pet Peeves Fixed
The disappearing status bar bug should be gone for good. We also fixed most of the scenarios where the URL you were typing in the address bar would get stomped or disrupted if a navigation happened while you were typing.
(Edit: Made it clearer that these are just changes made between RC1 and RC2. See the official documentation and other blog entries for a more complete list of changes made in SP2.)