I've owned Gen 1, and 2 monteros, for over 18 years.
I've had my 04 for 5 months now, and a few observations:
The ride is alot smoother on the highway, and even off-road you'll notice a big difference. The power from the 3.8 is great, and like others have said, the 5 speed auto trans is a terrific unit.
As far as living with it day to day, if I could, I'd rather have a low mileage Gen 2.
I prefer the more "truck like" qualities of my old '95 SR.
YMMV, just one man's opinion... <img src="/forums/images/graemlins/smile.gif" alt="" />

98 Gen 2.5
05 Pontiac GTO
91 Corvette ZR-1
2011 Kia Sorento (wifey mobile)
Clarkdale, AZ