If the unit occupies the terrain, the first 2" of that terrain extending away is still occupied terrain and is not intervening terrain.
Am I correct in reading this as essentially saying that a defending unit occupying wooded terrain effectively has a 2" "buffer" around itself that it does not treat as intervening terrain, but instead occupied terrain, but that same 2" is considered intervening terrain to an attacker and counts towards the 6" blocked LOS distance?
No, that would be target occupied. Gives the +1 woods terrain modifier but would not block LOS. Target occupied terrain, including the 2" out from occupied terrain, affects attack modifiers but does not block LOS.
In other words, if a unit has 6.5" of woods between its base and the edge of wooded terrain it occupies, it has a net 4.5" of intervening wooded terrain between itself and its targets. Would any targets that fire against this unit treat it as if it has the full 6.5" of intervening woods that it physically has between the edge of the terrain and its base, or would it also ignore the 2" of woods that the unit has "occupied" when calculating LOS, treating it as a the same net 4.5" of intervening woods?
4.5" of intervening.
Terrain is either attacker occupied, intervening, or target occupied. It's never intervening and occupied. Doesn't matter if you are determining attack modifiers or line of sight blocking, the answer of is the terrain occupied or intervening stays the same.
Intervening affects attack modifiers and can block LOS.
Target occupied affects attack modifiers only.
Attacker occupied doesn't affect anything.
If the attacker/target then switch places, the definitions of attacker occupied and target occupied swap, but that same results. This can mean different attack modifiers based on target occupied or attacker occupied, but can't change whether line of sight is blocked, because neither the attacker occupied or target occupied block line of sight.