D1 was digital component. D2 was Digital Composite, and on pg. 242 of the Reeves-Stevens "Making Of Star Trek Deep Space Nine" (December 1994) the authors mention that the film footage for DS9's Seasons 1&2 were transferred to D2 tape and D2 was the editing format.
Now then I was just watching "Suspicions", "Rightfule Heir" (TNG) and "Progress" (DS9), and I have a hard time believing TNG's last 4 seasons were edited on D1, since, when compared to DS9, the video quality is just not there for TNG. Yes, the episodes came from something of higher quality than 1", and while parts for the SFX may've been edited on D1 or D2, the seem to have been dumped to another format and the final masters, that have been used for the upressing and DVD's, appear to have originated in the analog domain.
While it's possible the DVDs were encoded from a composite source (hence the dot crawl and rainbow artifacts that were often seen) we know they were transferring from film at CIS to component D1 tape from S4 of TNG and still using the format in S1 of ENT (in ENT's case, VFX plates were downconverted to D1 from the 24p HD master, exclusively for bluescreen compositing and other VFX work which were done in the SD realm).
According to my October '93 issue of Cinefantastique
, it says in an article about the S6 TNG VFX work that Digital Magic (who took over from the Post Group starting in S5) was working with D1 tape. Digital Magic also handled DS9 S1 at the same time. It seems odd that after all that careful work they would finish their on-line edit on D2 tape when DigiBeta was available, but anything's possible I suppose given they were still clinging to D1 for VFX when ENT launched!
But D2 for the initial film transfer? No way. There were too many bluescreen shots on these shows to use a composite tape format. Even in Seasons 1 & 2 of TNG they used a pin-registered Rank telecine that transferred all VFX footage in RGB component direct to an Abekas Digital Disc Recorder for compositing work.