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Why IS Lucy Liu in Volume 2? Does she even have an important role? Or will it just be for the flash backs?

Hmm...I guess its most likely the flashbacks. Like what happened in the beginning of part 1, where you already saw her cross off the name "Black Mamba" and "O-Ren". Then you would think, what happened with O-Ren? So, the flashbacks went on, and blah blah.

She is one of the DIVAS that beats up the Bride in the church. So is very likely that QT will include her in the vol.2. Most likely in flashbacks just like dragonpisces272 mentions above.

not unless you expect her to be reincarnated