I also agree that Breath of Fire 1 is overall better than the second one (in terms of characters, story line and of course music). Then again, the Breath of Fire series gradually spirals downwards in my opinion. Every sequel seems to be worse than the previous one. So, from best to worst, that would be the following: 1, 2, 3, 4 and 5. The first one is the best and the second one is pretty good too, but the other three don't quite appeal to me. Well, I suppose that the third one is alright, but that's about it. One other thing worth mentioning, is that everyone is pure blooded in the first game and each character has a unique ability. This was something that was lost in the other games, namely the ability to transform for Ryu and Nina.
As for the story line in the second game, I think that the so called "God" is actually a demon/devil that's tricking people by pretending it's holy to absorb their energy. I believe that it also teaches people not to blindly follow or obey any religion or priest. In other words, people need to find and realize the truth for themselves. Similar, but not quite the same to the evil trickster Goddess in the first and third game.