A number of Yahoo groups are dedicated to 2-rail O, including Otrains, OSCALEMODELERS, Oscalekings, O_scale_model_railroading, oscalers, oscaletrains, and OSCALEYARDSALE. You will likely find more answers there than here, for the emphasis here is on 3-rail O, not 2-rail, and other less fussy scales and forms of model railroading.
DCC is certainly viable in O scale, but, as you probably suspect, you cannot translate an HO system directly into O, as the power requirements are much higher (though HO systems can be fairly readily adapted for On30 trains). Still, some of the more robust HO equipment can by used for light duty in O. You'll need to think about whether you're planning on running plastic diesels or brass steam, for example.
Good Luck!
For what it's worth, the DCC standards are the same for HO, S, and O scales:
http://www.nmra.org/standards/DCC/standards_rps/S-91-2004-07.pdf
You might be interested in Dave Vergun's experiment using radio-controlled-airplane equipment to operate O-scale trains on 2 rails. He has posted a lot of description and pictures on this forum.
Bob Nelson
A lot of O scale guys frequent the Atlas forum, seems to be a very nice crowd.
http://forum.atlasrr.com/
After you click the link, you need to select forums & then O scale.
Don't know that much about two rail just that MTH makes the claim that the DCS system can be used for DC electric operation. As most guys mentioned you will need more power than the DC power packs from the HO side of the hobby, most three rail take up to five amps to operate correctly(maybe more than five amps at times) and I would think that will apply to two rail also, so I would think that a G gauge power supply may be helpful for you.
Lee F.
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