It is the same at our school. Although we have a 'high pass' (as well as a low pass) category, on the MSPE, this category is dropped and it just shows up at pass, honor, fail... as a result, a large number of students are lumped into the pass category.
This will be reflected in your class rank. I only honored two or three classes/clerkships, (the rest was maybe 2/3 HP and 1/3 P) and still fell into the 2nd quartile (we dont do exact ranks).. i was concerned i would fall into the 3rd quartile because of the lack of honors. (obviously this all depends on how liberal your school is in doling out honors.. if everyone is getting honors and you arent, it may be a problem)
As a whole, 1st and 2nd year classes aren't worth much (dont fail them though..). Most important are probably your Step 1 scores and your 3rd year clerkship grades (plus the comments). Even if you don't honor many (or any) clerkships, work your ass off and get some good comments since thats whats going into your MSPE letter. I think the MSPE letter is what makes or breaks the average candidate. (obviously if you are a superstar with 250 board scores and all honors, you dont have anything to worry about).
As a 2nd year though, you are probably getting ahead of yourself. Just try your hardest to learn the material as best you can so you can do well on the step 1.
