Devolver has released 15 minutes of footage from the E3 demo of Shadow Warrior 2. The footage is a mix of single player combat as well as showing off some two player co-op action towards the second half of the video. From the footage it looks like you can heal your teammates but it's hard to tell if you can enable friendly fire or not.
The footage also shows off a host of new weapons that you'll have access to including the katana from the first game, a sub-machine gun, and wolverine like claws (right around the 10 minute mark). I'm definitely digging what the folks at Flying Wild Hog are putting down with this footage and this might become a new stable at future LAN parties.