I had the old rule book long ago, and decided to get back into the game with this update. The main reason I see to get this one instead of the old one is the updated rule set, which is the last portion of the book. Rules for magic/psi have their own sections earlier in the book. The rules as written are still kind of clunky, but everything is there... except for the fact that there's still no rules (or guidance of examples) of how movement works during combat. However, there is a free Palladium fantasy Paper Miniatures PDF that does specify how to do that. So contained in this book is pretty much a core rule book for Palladium Games, including things that will probably never come up in RIFTS itself like human hit points and AR.
Changes appear to include the fact that SDC weapons can now damage MDC armor/structures given a huge amount of SDC. So MDC is now just a multiplier. I bet the difference won't come up very much and I suspect has something to do with a tank and a fairy. Also MDC armor is now a plot element instead of just a armor simplification. Attacks per melee for an untrained person appear to be 1.
The story is updated, but the only difference, far as I can tell, is that Tolkeen has fallen, and the coalition is more aggressive. Though there are pictures of the updated equipment, the stats are not in here. So just know that you will be playing the older time if you only have this book. Just ignore all the stuff about Tolkeen and you're good. In retrospect, one of the goals of the book is to know what the other books add to the game.
There is a new OCC called an elemental fusionist. This guys balances 2 opposing elemental forces. It is annoying the books says that some of the spells must be looked up in the RIFTS book of magic, but there's still a ton left to that OCC if you just ignore that paragraph. There is also some new background info on glitterboy pilots.
I'm guessing it's just rolling up all the little changes that crept up in the other books over time. Perhaps in the equipment listings, spiky things that do extra damage in later books do damage right up front. I can't confirm that but it would be nice if they made everything constant.