Oddly enough, and I had never really thought about it until someone else mentioned it here, Angelus actually seemed more dynamic and diabolical in Sunnydale than he did in his later appearances on Angel's own show, though that might be accounted for by the fact that we simply saw him for longer during that single season that we ever got to thereafter. Or maybe Angel's new found dynamic personality, even when subjugated by the monster, was still able to exert some, albeit slight, degree of control.
I attribute this seemingly "toothlessness" of Angelus in S4 to a few factors.
1) In Sunnydale he was new, we had no idea what to expect from him. His presence, in of itself, felt
dangerous for the show and by extension, the viewer. The potential for what he could do was exciting. We knew nothing of re-cursing, Angel was gone. On top of that, up until the last few minutes of Becoming part II, it didn't feel like Buffy could even take him out.
We knew that no matter what happened he was changing everything we knew about BTVS and its characters. That's very hard to recreate. Or better.
Compare this to S4 where we knew he was only going to be there for a short period of time. We knew that Willow, or some other magical means, could be employed to bring Angel back. There was just no risk. His presence did not live up to the anticipation created by the prospect of his presence. It was just underwhelming. That was not aided by him being in a cage for large portions of his stint in S4. Kind hard to be threatened by the guy whose plan seems to consist of taunting and insulting you to death.
2) Compared to how we found ourselves in Angelus' company in S2 of Buffy, his emergence is just plain boring in S4. A shaman gives him a dream? How does that hold up to lost love and betrayal? Buffy and Angel nearly having it all and then it cruelly being taken from them. It just can't. Which brings me to my third and final point.
3) No Buffy. I would argue that the main reason Angelus was so much more...everything, in S2 of Buffy, is because we were seeing him through Buffy's eyes. The pain he created was hers, the terror he imposed she felt, the devastion he laid out, she reaped. What made this even more compelling is that she played a part in creating this monster, and now our hero had a genuine threat. Someone we didn't really know if she could take down. Or even more compelling, did she even want to?
We got NONE of that in S4. We saw Angelus through Angelus's eyes and well, he's pretty ridiculous. The worst thing he could really do in S4 was
not tell them the info. That's just...pathetic in comparison.