Like a surprisingly large amount of people I have an affection for this much-maligned sequel, in part because of the set up: nerdy guy, considered a joke by the cool kids, becomes a cool motorcyclist and wins the heart of Michelle Pfeiffer. So I'm not very objective about it, but I will do my best.
It was directed by a choreographer, Pat Birch, and she does a decent job - the screen is packed full of production value (it's very bright and colourful), and there are some well shot numbers, such as "Back to School" (which feels like the one bit in the movie everyone can admit they like) but also "Score Tonight" and "Reproduction".
I felt the music is good too; it lacks Grease's classics, but there are some genuinely strong rock numbers ("Back to School", "Cool Rider", "Prowlin'"), some very fun over the top ones ("Reproduction", "Score Tonight", "Let's Do It For Our Country", "Rock a Hula-Luau"), the camp classic "Who's That Guy?" (with ridiculous lyrics but a thumping, kick arse bass), some syrupy sweet tacky ballads that I actually liked ("Charade", "Turn Back the Hands of Time") and the sweet "Girl for All Seasons". The only real flat song in the soundtrack is "We'll be Together" but you don't mind so much since it's at the end.
Michelle Pfeiffer is an absolute star in this movie - the people who didn't discover her until The Fabulous Baker Boys were foolish, her charisma is all over this, and she's absolutely perfect; not the best singer or dancer it's admitted, but so well cast.
The supporting T-birds and Pink Ladies are strong - not outstanding but up to the standard of Grease: Lorna Luft, Adrian Zmed, Maureen Teefy (who did Fame and this then seemed to vanish) etc. Plus there's some fun adults, like Eve Arden (making every line a winner), Sid Caesar, Tab Hunter, Connie Stevens, etc - as well small roles from Matt Lattanzi and Lucinda Dickey.
So what are the main flaws? (I'm aware all the things I listed above are positive, others might find negative.) Maxwell Caulfield is a big one - he's got the right look for the role, dreamy and sensitive and all that, but he doesn't have Pfeiffer's charisma and strength; he has this moony look far too much of the time, as if he spends a lot of his down time staring at himself in the mirror. (Check out the poster - Pfeiffer's eyes are alive and engaged, looking at Caulfield; he's just staring at the mirror.) It's also really annoying he can't sing or dance; Pfeiffer gets by just but Caulfield collapses. Neither of them have the genuine performing chops of Olivia Newton John and John Travolta - surely they considered other names for the lead?
It's not all Caulfield's fault - the script is a lot to blame because of it's structural dodginess. Pfeiffer is set up at the beginning as being over Adrian Zmed and sick of life as a Pink Lady - so it doesn't make sense that she turns down Caulfield (the real guy not the pretend guy) because she's a Pink Lady. Also Zmed is meant to be jealous over Pfeiffer but hooks up with Lorna Luft straight away - so when he continually whinges to Pfeiffer it gets dull and repetitive.
(I have a friend who wanted to remake this as a lesbian love story with Michael and the Cool Rider as a girl - it made more sense that way because then you have the societal block of Stephanie being attracted to a woman.)
This problem is increased by the fact they weaken the T-Birds too much - in the original sure the T-Birds could be clowns but Danny Zuko and Knickie were bad-asses who didn't back down from a fight; here Zmed and the others are downright cowardly, running away from Balmudo and generally being idiots. It makes no sense that there are all these scenes were they chase after the Cool Rider (who, after all, helped them by knocking over Balmudo). It also means at the end when Zmed invites Caulfield to join the T Birds there's no sense of triumph as he is obviously too cool for that group by then.
It's nice how Pfeiffer and Caulfield bond genuinely when he helps her study, but that comes too late in the film; and far too often it's like these two are in their own movie, separate from the others. Danny and Sandy in Grease were in the thick of things, with Danny head of the gang and Sandy wanting to join the girl gang - but Michael is off doing his own thing, and Stephanie barely wanting to be a Pink Lady. (In the production number 'Reproduction', it jars you when you see Caulfield and Pfeiffer joining in - you're reminded that they actually go to this school and sit in the same classes as the others.)
I think this problem might have been fixed if Michael had been related to one of the T Birds instead of Didi Conn; I get why they went the way they did, but at least then he would have had more connection to the boys, and had some mates. Also Stephanie/Pfeiffer really needed to lead the Pink Ladies.
Anyway, it's all done now and the movie lives on in the hearts of it's fans.