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You should be fine going from RC1 to RC2. A couple of people have reported issues in the 2.0 versions with the uninstaller, but upgrading should work, and yes, I believe it's supported (and recommended). I don't know when RC1 is set to expire, but if it hasn't already passed I think it's coming up soon.
I had some problems installing RC2 after removing RC1 (via Add/Remove). After cleaning up the left behind files, etc., it went well. I think RC1 expires at the end of October. There are several discussions in the Beta forum covering these questions.
Host and Guest Systems:
Windows XP Pro x64 Edition;
VMware Server 2.0.0RC2, Build 110949
Thread moved to Server 2 beta:Installation/Upgrade forum.