Razor,
The goals are different for the Levels. In level I, my goals are for the students/mentees to find their creative voice -- get in touch with their inner storyteller, so to speak. My secondary goal is to get them used to and depersonalize the review/critique process and to show, by example, the sorts of things that revision and rewriting should focus on.
Here in level II, i think (and feel free to correct me, Aussiegirl), students are asked to think more about the thought processes that go into writing.
Both aspects are necessary to make a good writer. If you understand the thought process you go through when you write a really kick-ass story, you will be more likely to repeat it. On the other hand, if you write a kick-ass story and have no freaking idea how you did it, then it will be like playing golf with a grass-green ball -- you don't really know what you are aiming for.
Just a simple sub's tuppence.
rose