I think it's best to move functionality, do testing, then update both for the new v2 structure and systems.  
Until there is nothing more to extract and nothing more to test. Then it's complete.
Starting with smallest features.


Updated Plan: Extract → Test → Update → Repeat
The plan now follows your preferred approach:

Process for Each Feature
EXTRACT - Copy exact code from V1 to V2
TEST - Verify V2 feature works
UPDATE - Apply V2 patterns (signals, base class, etc.)
TEST - Verify again after updates
REMOVE - Delete code from V1
Repeat until V1 is empty
Extraction Order (11 phases)
#	Feature	Lines

Done When
V1 mode_play.gd is deleted
V2 passes all gameplay tests
No V1 code remains