One thing that puzzles me slightly is the volume of the recordings. I adjusted the settings on the H2 (recording level & mic gain) so that the level didn't appear to be overloading while I was recording & it sounded OK in headphones. But when I looked at the WAV file with Audacity, the singing was very very quiet and the dynamic range was tiny; I had to tweak it quite a lot to get something decent. Is that normal?

That appears to be normal to me. My main use of the H2 is recording classes in which I'm participating so I can't monitor the recording. Because of this I use it's inbuilt AGC but it still produces the apparently low level. Treewind's explanation makes sense to me.

The bottom line is that I've never had reason to complain about the end result.