The first 'The Last Blade' had some impact, because it brought an incredible sense of freshness to a console that a short time later would die (the first 'Fatal Fury' and this 'LB' don't seem to have been produced on the same and identical hardware), while 'The Last Blade 2' is a better sequel, but is a simple update of a game already released the year before and for this reason not everyone likes.
It's like in the case of 'Real Bout Special' and 'Real Bout 2': 'RB2' is an improved game, but at that time to monetize us as much as possible, SNK cut a lot of details and if you don't play this chapter with another person, 'RB2' it's quite boring compared to 'RBS', which has much more details that can be enjoyed even playing independently.
I am always partial to LB2's burning house stage. I mean you have to be pretty angry at your opponent to forego your own safety to fight in a burning house.
LB2's fire stage was treated as some kind of new, alien technology in online discussion when that game came out.
When I think of 'The Last Blade', the first two things that come to mind are the autumn garden of Kaede's house seen in 'LB1' and also the burning attic in 'LB2' that you just mentioned.
Original Source of the image.