diff --git a/.claude/CLAUDE.md b/.claude/CLAUDE.md
index 4933885..58fa81a 100644
--- a/.claude/CLAUDE.md
+++ b/.claude/CLAUDE.md
@@ -3,7 +3,8 @@
 ## Workflow
 
 - v1 is a single-file Python app (`bterminal.py`). Changes are localized.
-- v2 planning docs are in `docs/`. Architecture decisions are in `docs/task_plan.md`.
+- v2 docs are in `docs/`. Architecture decisions are in `docs/task_plan.md`.
+- Phase 2 (Terminal Pane + Layout) is complete. Phase 3 (Agent SDK) is next.
 - Consult Memora (tag: `bterminal`) before making architectural changes.
 
 ## Documentation References
diff --git a/CHANGELOG.md b/CHANGELOG.md
index 54eb805..bc43012 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -8,10 +8,19 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 ## [Unreleased]
 
 ### Added
-- v2 project scaffolding: Tauri 2.x + Svelte 5 in `v2/` directory (Phase 1 complete)
-- Rust backend stubs: main.rs, lib.rs, pty.rs, sidecar.rs, watcher.rs, session.rs
-- Svelte frontend with Catppuccin Mocha CSS variables and component structure
-- Node.js sidecar scaffold with NDJSON communication pattern
+- Rust PTY backend with portable-pty: spawn, write, resize, kill with Tauri event streaming (Phase 2)
+- xterm.js terminal pane with Canvas addon, FitAddon, and Catppuccin Mocha theme (Phase 2)
+- CSS Grid tiling layout with 5 presets: 1-col, 2-col, 3-col, 2x2, master-stack (Phase 2)
+- Layout store with Svelte 5 $state runes and auto-preset selection (Phase 2)
+- Sidebar with session list, layout preset selector, and new terminal button (Phase 2)
+- Keyboard shortcuts: Ctrl+N new terminal, Ctrl+1-4 focus pane (Phase 2)
+- PTY bridge adapter for Tauri IPC (invoke + event listeners) (Phase 2)
+- PaneContainer component with header bar, status indicator, and close button (Phase 2)
+- Terminal resize handling with ResizeObserver and 100ms debounce (Phase 2)
+- v2 project scaffolding: Tauri 2.x + Svelte 5 in `v2/` directory (Phase 1)
+- Rust backend stubs: main.rs, lib.rs, pty.rs, sidecar.rs, watcher.rs, session.rs (Phase 1)
+- Svelte frontend with Catppuccin Mocha CSS variables and component structure (Phase 1)
+- Node.js sidecar scaffold with NDJSON communication pattern (Phase 1)
 - v2 architecture planning: Tauri 2.x + Svelte 5 + Claude Agent SDK via Node.js sidecar
 - Research documentation covering Agent SDK, xterm.js performance, Tauri ecosystem, and ultrawide layout patterns
 - Phased implementation plan (6 phases, MVP = Phases 1-4)
diff --git a/README.md b/README.md
index f6467da..d623b96 100644
--- a/README.md
+++ b/README.md
@@ -2,7 +2,7 @@
 
 Terminal with session panel (MobaXterm-style), built with GTK 3 + VTE. Catppuccin Mocha theme.
 
-> **v2 in progress (Phase 1 complete):** Redesign as a multi-session Claude agent dashboard using Tauri 2.x + Svelte 5 + Claude Agent SDK. Project scaffolded on branch `v2-mission-control`. See [docs/task_plan.md](docs/task_plan.md) for architecture and [docs/phases.md](docs/phases.md) for implementation plan.
+> **v2 in progress (Phase 2 complete):** Redesign as a multi-session Claude agent dashboard using Tauri 2.x + Svelte 5 + Claude Agent SDK. Working multi-pane terminal with PTY backend, CSS Grid tiling, and Catppuccin theme on branch `v2-mission-control`. See [docs/task_plan.md](docs/task_plan.md) for architecture and [docs/phases.md](docs/phases.md) for implementation plan.
 
 ![BTerminal](screenshot.png)
 
diff --git a/TODO.md b/TODO.md
index 3728723..fc57566 100644
--- a/TODO.md
+++ b/TODO.md
@@ -2,12 +2,13 @@
 
 ## Active
 
-- [ ] **Phase 2: Terminal Pane + Layout** — CSS Grid tiling, xterm.js with Canvas addon, PTY via portable-pty, SSH/shell/Claude CLI support.
 - [ ] **Phase 3: Agent SDK Integration** — Node.js sidecar, SDK message adapter, structured agent panes with tool call cards.
 - [ ] **Phase 4: Session Management + Markdown** — SQLite persistence, session CRUD, file watcher, markdown rendering. MVP ship after this phase.
-- [ ] **Benchmark Canvas xterm.js** — Verify <50ms latency with 4 panes on target hardware (Phase 2 gate for Electron escape hatch).
+- [ ] **Pane drag-resize handles** — Deferred from Phase 2, current presets sufficient for MVP.
+- [ ] **Copy/paste (Ctrl+Shift+C/V)** — Deferred from Phase 2.
 - [ ] **Evaluate Deno as sidecar runtime** — Single binary, better packaging than Node.js. Test SDK compatibility.
 
 ## Completed
 
+- [x] **Phase 2: Terminal Pane + Layout** — PTY backend (portable-pty), xterm.js + Canvas addon, CSS Grid tiling (5 presets), sidebar, keyboard shortcuts. | Done: 2026-03-05
 - [x] **Phase 1: Project Scaffolding** — Tauri 2.x + Svelte 5 scaffolded in `v2/`, Catppuccin theme, Rust stubs, sidecar scaffold. | Done: 2026-03-05
diff --git a/docs/findings.md b/docs/findings.md
index 613ca92..7a8eb0e 100644
--- a/docs/findings.md
+++ b/docs/findings.md
@@ -132,17 +132,17 @@ Zellij uses WASM plugins for extensibility:
 
 ## 6. Frontend Framework Choice
 
-### Why Solid.js
-- **Fine-grained reactivity** — updates only the DOM nodes that changed, not the component tree
+### Why Svelte 5 (revised from initial Solid.js choice)
+- **Fine-grained reactivity** — $state/$derived runes match Solid's signals model
 - **No VDOM** — critical when we have 4-8 panes each streaming data
-- **Small bundle** — ~7KB vs React's ~40KB
-- **JSX familiar** — easy for anyone who knows React
-- **Signals** — perfect for streaming agent state
+- **Small bundle** — ~5KB runtime vs React's ~40KB
+- **Larger ecosystem** — more component libraries, xterm.js wrappers, better tooling
+- **Better TypeScript support** — improved in Svelte 5
 
-### Alternative: Svelte
-- Also no VDOM, also reactive, slightly larger community
-- Slightly more ceremony for stores/state management
-- Would also work, personal preference
+### Why NOT Solid.js (initial choice, revised)
+- Ecosystem too small for production use
+- Fewer component libraries and integrations
+- Svelte 5 runes eliminated the ceremony gap
 
 ### NOT React
 - VDOM reconciliation across 4-8 simultaneously updating panes = CPU waste
diff --git a/docs/progress.md b/docs/progress.md
index 2a07516..314c256 100644
--- a/docs/progress.md
+++ b/docs/progress.md
@@ -43,5 +43,22 @@
 - [x] Project meta files: CLAUDE.md, .claude/CLAUDE.md, TODO.md, CHANGELOG.md
 - [x] Documentation structure: docs/README.md, task_plan.md, phases.md, findings.md, progress.md
 
+### Phase 2: Terminal Pane + Layout (complete)
+- [x] Rust PTY backend with portable-pty (PtyManager: spawn, write, resize, kill)
+- [x] PTY reader thread emitting Tauri events (pty-data-{id}, pty-exit-{id})
+- [x] Tauri commands: pty_spawn, pty_write, pty_resize, pty_kill
+- [x] xterm.js terminal pane with Canvas addon (explicit, no WebGL)
+- [x] Catppuccin Mocha theme for xterm.js (16 ANSI colors)
+- [x] FitAddon with ResizeObserver + 100ms debounce
+- [x] PTY bridge adapter (spawnPty, writePty, resizePty, killPty, onPtyData, onPtyExit)
+- [x] CSS Grid tiling layout with 5 presets (1-col, 2-col, 3-col, 2x2, master-stack)
+- [x] Layout store with Svelte 5 $state runes and auto-preset selection
+- [x] Sidebar with session list, layout preset selector, new terminal button
+- [x] Keyboard shortcuts: Ctrl+N new terminal, Ctrl+1-4 focus pane
+- [x] PaneContainer with header bar (title, status, close)
+- [x] Empty state welcome screen with Ctrl+N hint
+- [x] npm dependencies: @xterm/xterm, @xterm/addon-canvas, @xterm/addon-fit
+- [x] Cargo dependencies: portable-pty, uuid
+
 ### Next Steps
-- [ ] Begin Phase 2: Terminal Pane + Layout (CSS Grid, xterm.js, PTY)
+- [ ] Begin Phase 3: Agent SDK Integration (Node.js sidecar, SDK message adapter)
diff --git a/docs/task_plan.md b/docs/task_plan.md
index 75e4c49..3247e30 100644
--- a/docs/task_plan.md
+++ b/docs/task_plan.md
@@ -3,7 +3,7 @@
 ## Goal
 Redesign BTerminal from a GTK3 terminal emulator into a **multi-session Claude agent dashboard** optimized for 32:9 ultrawide (5120x1440). Simultaneous visibility of all active sessions, agent tree visualization, inline markdown rendering, maximum information density.
 
-## Status: PLANNING (Rev 2 — post-adversarial review)
+## Status: BUILDING (Phase 2 complete — Rev 2)
 
 ---