Rudder post slop & "thunking"
I have a tiller steered ''78 Catalina 30 that developed the same symptoms. I contacted Catalina and they responded with a data sheet showing how to make a repair.
There are no bearings; just a fiberglass tube glassed to the hull into which the rudder stock fits. Since the rudder is buoyant, there is no vertical load. After a number of years, the lateral and vertical motion of the rudder caused wear on the inside of the fiberglass tube.
The recommended "fix" was to remove the rudder head fitting and drop the rudder (had to dig a shallow hole), clean the rudder stock and coat it well with "mold release" wax (available at West Marine), clean out the "tube" using acetone with the aid of rags and a broomstick, re-install the rudder in the tube and replace the rudder head fitting to hold the rudder in place, use modeling clay to seal the lower end of the rudder stock and tube, and pour resin (mixed with hardener) into the space around the top end to fill the gap.
Keep a watch on the leftover resin. As soon as it "sets", move the rudder back and forth to ensure that a hard and fast seal doesn''t develop. The wax should prevent that, but I think it''s best to play it safe.
Believe me, it took a while for me to get up the guts to do it but it worked out just fine and the rudder action is the best it has ever been.
Catalina also warns against using any kind of lubricant after the job is completed. They say that lubricants attract and hold foreign material and in general gum up the works.
That''s how it works on a Catalina 30. I''m not familiar with the S2.