That seems way too slow, I agree. Not sure what the problem is. BTW ext3 is a bit safer than ext2, but also a bit slower. Not that slow though.

Yes, you can do the whole process on a host PC. It might be faster. Use the same commands, only adapt the paths accordingly.

Edit: You may not need to copy full 2 GB. The image is 2 GB. Think of it as an external hard disk. It is not entirely full, you will only have to copy the data.