There are a string of episodes in the back nine of S2 that are some of the best television I've ever seen. If I had to narrow it down to just one though, I'd go with "Passion". Everything was dialed up in that episode. There was a real escalation of the stakes, and it firmly entrenched Angelus as THE new franchise villain, and, in my books at least, one of the all time greats in all of television.
I've said it many times, but I'm a sucker for any of the big Bangel moments (especially the sappy ones 🙂), and this is an amazing episode for that. It's my favorite Buffy episode ever.