After some more testing, some more conclusions:
1. I hit Tier 2 after turning in my 40th completed quest. I had cancelled 6. I'm thinking 40 is the magic number and cancelling has no effect--after I turned in my first Tier 2 quest I cancelled 2 more to see if it would drop me back but it didn't.
2. It appears that from Tier 1 to Tier 2 your loot increases by 20 in each city (except rare resources of course) and your city contribution increases by a few K.
I did 10 more quests the way I did the first ones, but this time I timed them! As you can see, starting in Tram (or Fel I suppose) then finishing in Fel through the public moongates makes a pretty short quest, usually 2 minutes or less. (Please note that this is RUNNING TIME ONLY and does NOT include gathering requested items! This will vary per tier and per city!)
I meant to compare time spent on each quest. Next up was running the trade quest Tram to Tram. You can't moongate, and since I started in NM every time I had to sail every time.
Holy whoa, no thank you. I got so bored I gave up after four quests I went to play another game. The rewards were no different but the tedium is killer. I could do 20 Tram to Fel quests in that time. New Magincia can go the way of old Magincia if this is what it takes to keep it going! (No really, the island cities are doomed for contribution money if the moongate option is removed.)
So I haven't tried Fel to Fel, killing the monsters, or Slim yet. I figure others are probably working on Slim. If I wake up before the publish goes live I'll try Fel to Fel and killing the monsters and see if the rewards are different.