Grade 1 has tighter tolerances between left and right, both output voltage and internal impedances. Better than the standard, not as tight tolerance as the Grade 2.
The R version has revised coil winding and wire, resulting in lower internal impedance and slightly less output and generally has a bit more treble presence than the regular 103. Though the R version is more money and hyped as a superior version by Denon, it is really more like a variation—for those that have a phono stage that matches better with the lower impedance or a system, or listener that needs a bit more treble push.
The Mk.II update is significant, both in performance and handling usage. The body is machined from 6061-T6 and hard anodized to aid in the matching of tonearm-mount properties and further reduce pickup stored energy. The shape of the housing has also been refined to reduce resonance and stress risers resulting in a much stronger design that better supports the motor assembly. We have also changed the epoxy matrix formulation that binds the assembly further reducing mechanical noise and positions increased stability to the stylus. In short we have been able to keep the great tone of the original Zu/DL-103R but give significantly improved transparency. Handling usage has also been considered and improved, with design elements to help safeguard the stylus from accidental damage—stylus guard being the most obvious feature.