I have both the 85/1.8 and the 85/1.2 II lenses.
The 1.2 has an excellent reputation, mostly due to its amazing bokeh (the creamy out of focus areas.) Shooting a tight headshot wide open, the eyes are in focus, and nothing else. The head seems to melt into the background, which itself is an abstract blur.
The 1.2 also suffers from some amazing color fringing at wide apertures on both my 1D2 bodies and my 40D. Since I like to shoot close to wide open indoors, and many of my locations have lots of windows in the background, this can be a problem. The 1.2 is also a heavy beast, and quite unbalanced on a 40D body, even with the vertical grip (though that helps.)
At f/2 and above, the two lenses are equally good.
This may sound like a negative review of the 1.2, but I love it. It's just not my first choice for carrying around and shooting. Along with my 24 and my 35/1.4 lenses, it's very useful under special circumstances, but it's not a general purpose lens. (For walking around and shooting candid portraits, my usual lens is the Canon 70-200/2.8 IS.)
Finally, a word about manual focus on modern AF cameras, since you mentioned the Zeiss. The standard focusing screen is optimized for brightness, not accuracy. It's **very** difficult to accurately focus a very fast lens wide open using manual focus on a digital SLR with a standard focusing screen. AF actually works much better. You can get a special screen for your Canon that will be more accurate, and better display your depth of field, but it's too dark to use with any lens slower than f/2, or maybe f/2.8.