A new release of the update - version 14.2.1 - gets around this problem by automatically rebuilding the database if corrupted files are discovered during the database upgrade process.
The revised updater also moves the user's Office Script menu items and autocorrect lists to the locations used by Office SP2, but only when updating from version 14.1.x. If SP2 has already been applied, the job must be done manually. Microsoft provides instructions here.
Other changes made avoid the need to select an Outlook identity when fist starting Outlook, and allow command-line installation of SP2 on Mac OS X 10.7 Lion and later (enabling the use of deployment tools such as Casper and Munki).
There's no indication that the issue requiring licence key re-entry (as reported by several users) has been addressed.