It does depend a little on what instrument you play, but I think you should definitely do Music 2!!
If you do AMEB exams you're probably a lot more suited to music 2 already, and seeing that the average music 2 AMEB level is about Grade 6 (higher for pianos, I think) you're definitely ready!! If you've done grade 5 theory as well that will help a lot.
From what I've seen at performance nights, Music 1 is geared more to people like singers and guitarists, mostly performing things like pop ballads, songs from musicals, jazz, rock, country, indie etc... so if you're doing AMus I'd assume you'd be better suited to Music 2.
Fewer people choose Music 2, but I think it's a much more worthwhile course. Also, if you do music 2 you can do extension in Year 12, which is REALLY good - if you do performance, it's not that much more work for 1 unit if you're already practicing a lot.
The only possible downside to music 2 is the core topic - Australian Music of the past 25 years. Most of the music is alright, but some of gives me nightmares. Also for music 2 (and possibly music 1? I'm not sure) you have to do a composition & keep a diary, so it wouldn't be a bad idea to work on your compositional skills
Music 2 is a lot of work, but you can manage it!! Good luck