Gohan had to use SS2 to pull the rock out, hence the bio electricity at the end point. So SS2 Gohan is stronger than them, you are right.
But South Kai fought on par with Buu that would mean that SS2 Gohan is stronger than Kid Buu
Or it's, you know, anime filler ^.^
The filler isn't too unreasonable though. South Kai had to be strong enough for Kid Buu to be interested in absorbing him, otherwise he would have just killed him like the others.
IMO it's a combo of South being the strongest kaioshin and Buu at that period of time not being QUITE as strong as he was in the Buu Saga.Â
But presence of Z-Sword given its reputation sort of hardcaps Universe 7 Kaioshins.Â
Doubtful. Shin stated that Kid Buu was returning to his original level of strength after expelling the impurities. There is no reason he'd be weaker back then.
There's also too little story and too many assumptions on that Z-Sword. Maybe South Kaioshin didn't want to pull it because he doesn't like swords. Maybe he didn't bother pulling it because he was satisfied in his own strength. Maybe the Z-Sword was lost for a long time and only got rediscovered after Majin Buu's first rampage (Shin has been on his own for a VERY long time).
maybe he was hungry?