While looking around for a compact hi-cap auto-loader, I have come across several second generation 469s and 669s for bargain prices. I have also seen a lot of police trade in 6906s and 6946s, though these are more in the Glock and M&P9c price range. I was wondering if there are any big advantages of a third generation pistol over the second generation guns. From what I have read so far, the first generation Smiths had issues, and the third generation are darn near perfect, but not much is said about the second gens.

I've had both and the only real difference to me are the sights. The 3rd generation when they switched to the low profile Novaks' was a great improvement to me. If I had a 2nd generation gun I would send it into Novaks' to have them installed. You could get mixed results with some 2nd generation guns, but the x69 series didn't show up for 4-5 years into the 2nd generation run so there were some improvements already made to them. There were other improvements made to 3rd generation guns that you may notice or not.

Also, the grip configuration is different. 2nd and 3rd generation grips are not interchangeable

I feel that the 3rd Gens are just a little bit slicker, more refined. I'm not knocking 2nd Gens, as I have some on my Grail Gun List!

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Lounge Lizard Extraordinaire

The lone standout however is the 645 which is the finest out of the box 45 ACP made by anyone ever.

You might get some argument on that statement!

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Lounge Lizard Extraordinaire

Except for the 457!

which gen had the removable barrel bushing?

first gen 59 has removable bushing ,

And they'd be wrong.

You can consider the third gen as a product improved second generation. As others have mentioned, the sights and the grips are two changes. (I prefer the three piece grips for the 2nd gen since a decent woodworker could make some darned nice replacements; the one piece are much more difficult.) The 3rd generation guns also have sleeker off-hand (right side) safeties, eliminating the screw on the second. Eventually the third gens did away with the squared off trigger guard. This change makes holsters easier to find. Later still, the barrel hood was changed, which doesn't affect feeding, but was simpler from a manufacturing standpoint. Internal parts were tweaked and the third generation guns may be more reliable, but that's up for discussion.
My opinion? I'd rather have a third gen gun, but would be quite happy with the second if that was what's available.