Does the Olympus kit lens work on other MFT cameras like the GF2? and is the quality of the image adversely impacted?
No problem using Olympus or Panasonic lenses on any mFT cameras. I have both and use several Olympus and Panasonic lenses. Only issue that you need to be concerned with is Image Stabilization. Don't let the the OIS vs IBIS debate get to you, good photos could be taken way back when IS wasn't available and still can.
AND using inexpensive adaptors, you can use literally ANY lens made over the past 50+ years.
I have and use 40 year old Pentax and 20 year old Nikon lenses with no trouble.