Paul,Code 2 IMO, shouldn't even be there, if you install something to the extent that improvement on your original installation practice is bought into question, what was the point in the first place?.
Remember that these codes are used on a periodic inspection report, so you're not necessarily reporting on your own work.
Code 2 can also be used for things like a cracked socket faceplate -- Not damaged to the extent that it exposes anything so it's not an immediate danger, but clearly something which could do with being replaced.
I agree though, it's very difficult to categorize certain things.
