In V1 the replication setup(defining file system) was done at remote server. But in V2, I think its on Source server. Am I correct?
Yes, this is correct. The wizard will help you set up your interconnects, create the destination filesystem, run the full copy and start replication.
Also what is the command to monitor the replication progress OR % of replication that is complete? The command nas_replicate -info only shows the status of the replication.
Remember that before you can begin replication, you will be doing a nas_copy, not a nas_replicate. You have to have a complete filesystem copy at the distant end before replication can begin. So you can monitor this initial copy using the nas_copy command, not nas_replicate.