Experience & drops
Is experience gain individual, divided/split between players, or
duplicated for each additional co-op player?
Each player gets the same experience. It is not split between them (like credits), but everyone gets the same amount (like ammo).
Do you get experience for others' work when you aren't in the same
area of the map?
You have to be relatively near an enemy kill (but not that close) to get the XP. (I think.) But quest experience is given no matter who turns in the quest and no matter how far away they are.
Do all players get the same quest rewards?
All players get the same rewards, with the exception if the quest gives different guns per class or random guns. If it's a single item, it will simply drop into your inventory if you weren't the one to turn it in. If there is a choice of items, everyone will get the mission accept dialog to choose their reward individually.
How are experience, difficulty, and item/money drops affected for each
additional co-op player?
I don't have exact stats, but there becomes more XP/items/cash and increased difficulty for each additional player.
Does the area difficulty scale to only the host's level, or does it accommodate/average difficulty between all players?
Host level, just like Borderlands 1. (You can twink low characters this way, as long as they don't get themselves killed everyone 10 seconds, I guess.)
Large level differences
Some games have disincentives when characters with large level
differentials play together—is that the case in Borderlands 2?
I haven't researched this, but I think the mechanic is similar to the way Borderlands 1 worked: meaning the XP is shared (not split) no matter your level.
Are higher-level characters' stats adversely affected when joining a
lower-level character's game? Or vice versa (boosting a lower-level character using a higher-level character's game)? Are experience gain or money/item drops diminished/impaired with large level differences? If so, what are the specifics?
It doesn't appear to alter the play stats or drops for differing levels. Basically, the host determines the level of enemies and drops, with number of co-op players increasing difficulty of enemies and amounts of enemies and item drops. (Though this isn't confirmed yet.)
I tested this today. Here were our findings:
The host controls which missions are available or not. (Enemy and weapon levels are based on the zone.) However, those missions can be accomplished by anyone in the host's game. Once completed, that mission is completed for all participating characters, even if they weren't normally able to complete the mission because they hadn't progressed that far in the game in single player yet.
All participating players receive the same XP, rewards, and mission completions for their character.
In other words, if you run with someone who is further ahead in the plot then you, when you leave and go back to your own game (not on the host's co-op server), then you will see any missions completed during that time with the first host, even if you haven't got to that point in the game yet. Then, once you get to those missions that you completed on another host's game, since the missions are already complete for you, you can just go on to the next, uncompleted mission as normal.
As a host, the game progress is the same as if you were playing single player.
The exception to all of this is for the Story Missions. You can complete them with the host, but when you go back to your own, non-host, instance, you will still be at your last uncompleted Story Mission if there was a gap in between the story missions you completed with the host. UPDATE: Once you catch up to completed Story Missions, you get a dialog asking if you'd like to 'fast forward', skipping missions you've already completed in other sessions:
![Fast Forward? - Would you like to skip missions you have already completed in another play session?](https://i.stack.imgur.com/eCi7o.png)
So yes, in my opinion, they "fixed" the ineligible mission message from the first Borderlands.
UPDATE:
If you complete a mission, then go back either on your own in single player or as the host, after having already completed it previously in a previous session, you get a message in the reward screen saying something along the lines of 'you have already completed the mission and received your reward' and then don't get the XP or item again — because you already got it the first time you completed it.
Playing through in Vault Hunter Mode doesn't count against this repeat reward limit though; missions there can be completed once more of course before you would get this message again in VHM.
Best Answer
Yes, it is possible. I play split-screen at my house (2 players on one console) and am joined by two friends playing split-screen at that house (again, 2 players on one console).
This is on the Playstation network but I personally heard Gearbox reps say that they made this work on all console platforms.