Reasons?
1) Character secific backgrounds
2) Superior musical score
Last Blade 2 is not bad by any means though. I think that the addition of Setsuna and Hibiki are two of the best character additions in any fighting game. The both of them kick ass. The additional "air recovery" element is nice too. The problem lies in the atmosphere. For me, atmosphere in games comes first, then gameplay. Games are all about immersing yourself in a different world. The atmosphere of Last Blade trumps that of Last Blade 2 with flying colors, and most other fighting games for that matter.
Moral of the story? I <3 the original Last Blade...
Oh, and Moriya too; in a totally hetrosexual sort of way.
PS: Anyone else notice that Moriya plays much better in the original Last Blade compared to how he plays in Last Blade 2?