@collinmanderson,
Thank you for posting this. I'm having the same problem, and I figured out that users must already be subscribed to the blog in order to use the S2 widget. Otherwise, they're directed to their admin page as you mentioned.
My problem is that I work for a school that uses a network of blogs that are all password protected. I have 130 blogs and 500 users, and in order for them to be able to use the S2 widget, I need to manually subscribe everyone to every blog (impossible!). S2 works perfectly on the school's main blog, however. I understand that you can't address everyone's needs since this is a free service (that you should be charging a bundle for! :)), but I wonder if you think this might be fixed in the next version and if so, when that version might be released. If not, I'll just disable it on all but the main blog.
Thank you for the wonderful support,
Jenny