Right well I looked into it... then I got carried away.
Now it does work with lvl2 files, mostly anyway. If you have multiple armadillos/portals then things will almost certainly go wrong, because the way this works in ar2 has changed a bit.
I also added SVG import, so you can use a fully featured drawing program like Inkscape to design an amazing level and then import it into AREdit... or just load up any old SVG file you like. Note that it's only very basic support, and only handles straight lines in the svg -- everything else is ignored.
Also added is the ability to change multiple items to another type. Just group select them and then go to the "multi tab".
Undo now works properly too (most of the time).
Anyway get it at
http://www.tuc.co.nz/aredit.zip .. enjoy.