To my ears the DF 1.2 wasn't as smooth as the Island. It was definitely an improvement over the v 1.0, but still somewhat fatiguing. Keep in mind that I'm rocking out to some Ultrasones which already have a fairly 'edgy' presentation. The Island has a much larger soundstage, control, power, and musical sound.
Let me put it to you this way... Between both DragonFly's, Explorer v. 1, and C5D (with no bass boost), picking apart the best/worst presentation of each device is somewhat difficult as the differences aren't all that great. The Explorer is certainly the more musical device of the three (four including both DF's). The C5D is a great portable rig with excellent bass boost options, yet it has the smallest soundstage. The DF has a more aggressive/punchy presentation which is also it's weakness during a long listening session. However, the Island was instantly my favorite when I plugged it in for the first time. It has a character and sound that the others don't have. As it's been said in the forum before, I'm surprised that it hasn't received more praise.
All that being said, I've read some really great things about the Explorer2. I would have no problem recommending the Explorer over the DF. I hope this helps. Any other Island owners want to chime in?