I love Leica glass as much as the next obsessive gearhead (God knows my wallet has suffered accordingly over the years), but I wonder how the discussion around the S2 would change if it weren't a Leica product.
What if say, Pentax, had, instead of the 645D, released the S2 as it's MF entry vehicle? Same glass designs, same construction, same everything, just no red dot or Leica mystique... For some reason images of a (verbal) "WTF were they thinking..?" crucifixion keep coming to mind ;>
As much as I wish them well and could debate the pros & cons and value propositions all day, the bottom line is I think the system was: a great concept that was pegged at 'old MF market' prices and released about 3-4 years too late. Regardless of why it was dropped on us when it was, it was released when not only the global economy but the economies of the MF hardware market were changing dramatically as the once-rarefied sector suddenly adopted a DSLResque depreciation and pricing curve as, in part, existing players started targeting upper-end SLR users.
My bet (sadly) is that I give it a 70/30 chance of becoming 'DMR, The Sequel'. System (lenses, grip, tilt/shift, etc) roll-out is already far, far too slow for a new product looking to gain traction. Once the 'pregnant snake' effect of affluent early-adopter Leica fan sales is complete, I think you'll see (are seeing??) volumes slow dramatically and pace of release of new lens/premium accessories follow accordingly (R&D $$ follow Sales $$) and the system eventually be allowed to become a tech showcase with collector mystique.
Had they stuck to their core expertise (glass) and co-developed the system with Phase (priced accordingly), offered premium glass for the Phase system and 'pulled a Zeiss (or Cosina Voigtlander)' (as mentioned earlier) recycling the sunk-costs of their R glass into LE, LF & LS mount lenses (your D3X/A900/1Ds3 would be your 'R10'), the prospects for Leica in SLR/MF land would be looking far, far different.
I think a right-priced 3_(or lower) MP, co-branded 'P2' in standard Mamiya mount and offering Leica-designed premium glass as an option would be a perfect adjunct system for a lot of Phase shooters. I also think they'd be selling as many CaNikOny lenses as they could make (talk about p****ng-away cash flow)...
Oh well...