As I understand it, IWD2 was supposed to be a somewhat quickly produced game that was intended to be a nice little money maker. Trying to make an IWD2 that was similar in concept to BG2 would have not fit this definition.
As much as I enjoy the 3rd ed rules, I could have enjoyed an IWD2 that was still 2nd ed based if they had spent all the time needed to convert it for 3rd ed rules to produce a more involved story, etc.
IMHO, as enjoyable as complex intra-party NPC conversations are, I understand that they are incredibly time comsuming to add. I'd have been very happy with either of the simplified joinable NPC's that I mentioned above with a few more areas and maybe some simple side quests.
The only "side quest" in IWD2 is the final retrieving of the Holy Avenger. Finding the Medallion of the Lost Followers was no side quest. It was simply embedded into the main line of the basic plot. You were going to find it witout having to go out of your way.
Come to think of it, I suppose that finding that plant for the village healer qualified as a side quest, but it was really pretty pathetically small to justify calling is a "quest". More of a little errand.
Perhaps, Suomo could have asked you to do some other "quest" without actually requiring it to get thru the Fell Wood.
Or perhaps, Iselore could have asked you to go over to the Vale of Shadows (an area from IWD1) for some reason or other. Heck, maybe Lysan's ghost is over there and is really PO'd at you for killing the Aurilites way back in Chapter 2 and is raising a little army of undead to take out her fury on Kuldahar.