With regards to wireless systems, presumably a G2 as compared to a higher end Lectrosonics or whatnot I'd expect longer range and fewer dropouts. Is there much difference however in the actual fidelity of the signal? Or do the higher end units merely provide range and stability and that the limiting factor for actual fidelity is really the mic itself?

Once you've stepped up as high as an Senn G2 system the limiting issue for fidelity is the lav itself. The ME2 included with the G2 is a mic most prosumers would say is "adequate". Most working pros would say "inadequate".

The mic included with Lectro systems is really not bad, but you'll find most pros using Sanken, Tram, Countryman, etc. lavs with their wireless of any brand.

One exception to these generalities about prosumer lavs is the Audio Technica AT1800 series. It is available from B&H (others?) configured with AT899 lavs, which are a significant step up from the lavs that come with typical prosumer systems. (note; this is not the standard config of the AT)

See forum member Dan Brockett's excellent article on lavs (http://www.kenstone.net/fcp_homepage/lavs_brockett.html) for more info.

The self noise of the units improves.
As does the companding noise present with some semi pro wireless.
General fidelity of the rf link is apparent.
A more natural sounding high frequency range is evident.
Also a greater dynamic range.

G2 is top of the cheap pack but lacks more than just range and diversity. True diversity helps with signal to noise as well as the two rx are summed to improve s/n ratio with some units. Micron for instance have been doing that for years.

I would say that stepping up to the G2 is really just getting on the first step. Not knocking them though. Great value for money.

I listened to a A-B test between Lectro and Senn. Both had the same Lav mic.
Both sounded identical on the voice.
Next test was a large wad of keys. Lectro passed the test. Senn could not handle the transient of keys jangling, signal sound like a you were crunching a bag of potato chips. Lectro sounded like keys jangling.

It's the same story with audio that it's always been. The ear takes years to develop and hear these things. They are not obvious to everyone immediately. If they were then there would not really be a specialist role of sound recordist as any one could do it.

Same with reverb, compression/limiting, EQ,etc..

I remember when I was 18 trying to tell a dubbing mixer I worked with how good the DBX on my Tascam Porta 5 4 track was. He just laughed at me but I couldn't hear it. Eventually I realised what he meant by 'pumping'.

Same with P.A. speakers. The cheap one's will handle Steely Dan but they break up and distort with Wagner's complex close voiced and massively orchestrated chords.

Once you've stepped up as high as an Senn G2 system the limiting issue for fidelity is the lav itself...
In light of Jimmy's & Brooks' comments & observations (with which I agree), what I should have written is:

"Once you've stepped up as high as an Senn G2 system the first limiting issue for fidelity is the lav itself..."

The point is, the fidelity of such systems as the G2 can be improved dramatically with a better lav. This doesn't make them equivalent to a Lectrosonics or other high-end wireless.