I'm pretty sure all model 2s have downgrade audio quality. The va3 / 4 model 2 has less bass than a good model 1 according to this guide-o:
http://www.sega-16.com/forum/showthr...-from-bad-ones
Also the va3 model 2 comes with other video encoders. With a nomad you're always gauranteed to get the cxa1645 and the awesome audio quality.
My nomad doesn't have fuzzy audio. I noticed plugging the headphone jack into my amp and speakers I'd only get 1 of the two channels (on a headset I got both channels). So I just tapped audio from the av port and got both channels working great on my sound system.
Also nobody has confirmed if the s-video from the model 2 va3 / 4 has the rainbow problem or not.