The difference between IWD's character development and BG2's character development is an entirely personal thing. It's your own imagination's emotions versus spoon-fed forced emotions.
I find the concept that IWD doesn't have any character development to be unfactual, not because the game doesn't provide any, but because by not providing me any they free me up to invent my own character's and imagine their development for myself - like true P&P. I find, when I play IWD, that I care more for my characters because they are all my characters, that I have created and grown to love based on what characters I like to play with (filth pun intentional). I really care if any of them come close to dying.
When playing BG2 however, I get all these pre-defined unchangable characters forced upon me, hardly any of which I can either relate to or like. The game then gives me pre-destined quests and group interruption based on something that is beyond my control. Whether I can emote with any of them is entirely subjective and in most cases I honestly wish most of them would find their death. And I then hate the game for making me hate my party. It's like P&P for people who don't have the actual imagination to play P&P. To me, it's the very essence of dumbing down.
And this goes against the grain of most people, because most people don't have active imaginations. Most people love being given characters because they need to be given something to emote to, because their brain can't self-emote. I know, arguing that real characters is dumbing down compared to not giving anyone characters is possibly bizzare to you, right... but that's how it is and that's the entire problem of modern gaming - it's trying to replace imagination with definite and better images in order to replace imagination, because it now needs to sell to the lowest common denominator, that huge group of people with no imagination.
Whether I'm right or wrong, it makes no difference, I have no choice to be in the minority here in never finishing BG2 but replaying IWD countless times, societal statistics mean that no matter what I say I will be out-voted. But that is how I feel. Cut the crap and give me more game and if you want to go full-story, then do it properly, like PS:T, don't give me forced emotions and horrendous party character idiosyncrasies.