A system is described which works on programs written in INTERLISP, and which performs partial evaluation together with other transformations such as beta-expansion and certain other optimization operations. The system works on full LISP and not only for a "pure" LISP dialect, and deals with problems occurring there involving side-effects, variable assignments etc. An analysis of a previous system, REDFUN, results in a list of problems, desired extensions and new features. This is used as a basis for a new design, resulting in a new implementation, REDFUN-2. This implementation, design considerations, constraints in the system, remaining problems, and other experience from the development and experiments with the system are reported in this paper.