Yes, the Anchor Bay website indicates that the Season 2 set will arrive early summer, 2005. Also, creator Alan Spencer mentions on the message boards of the official Sledge Hammer! website that he and Anchor Bay are currently in the process of putting together extras for the set, and the deadline to finish is in another week or so...
Thus, I would say it would be reasonable to expect it sometime in May or June at the latest!
Well, today it's official: "Sledge Hammer!" Season 2 arrives on April 5th! While not as good as the first season, season 2 still features several instant classics, including "Hammeroid", and one of my all-time favorites, the series finale, "Here's to you, Ex-Mrs. Hammer". The finale actually featured some real character development between Sledge and Dori, and a "shocking" scene where Dori chastises Sledge for being so violent and inhuman, causing him to throw his beloved gun across the room. He also awkwardly, kinda sorta proposes marriage to her in the final scene.
It's a pity that after this, there isn't a season 3 for me to continue getting my "Sledge" fix!