diff --git a/README.md b/README.md
index e94c9f4..b4e304d 100644
--- a/README.md
+++ b/README.md
@@ -9,18 +9,18 @@ This is an **engine foundation**, not a complete game. Many features (crafting,
 ```
 src/
 ├── camera.rs          # Panning camera, z-level control (Q/E, scroll)
-├── config.rs          # GameConfig resource
+├── config.rs          # GameConfig, TileRegistry resources
 ├── constants.rs       # Tile size, pathfinding constants
 ├── entities/          # Dorfs, pigs, rabbits — ambulatory entities
 │   ├── sentient/
 │   ├── livestock/
-│   └── shared_*/     # Ambulatory, pathfinding systems
+│   └── shared_*/     # Ambulatory, pathfinding, occupancy systems
 ├── game.rs            # ZIndex resource, frame timing
 ├── main.rs            # Bevy app bootstrap
 └── world/
     ├── chunks/        # ChunkMap, chunk loading/unloading, connectivity
     ├── generation/    # Terrain blobs, forestry, foliage (stub), fauna (stub)
-    └── tiles/        # TileMap, TileRegistry, rendering, visibility
+    └── tiles/         # TileMap, TileRegistry, rendering, visibility, tile change events
 ```
 
 ### Chunk Architecture
@@ -33,7 +33,7 @@ src/
 
 ### Rendering Pipeline
 
-1. `handle_tile_occlusion_updates` — raycasts from each tile upward to compute `visible_range` bitmask (which z-levels can see it)
+1. `handle_tile_occlusion_updates` — raycasts from each tile upward to compute `visible_range` bitmask (which z-levels can see it). Tiles in loaded chunks with no floor entry are treated as air (open space).
 2. `build_quilted_terrain_sprites` — GPU bake: tiles bucketed by `(render_chunk, z_level)`, blitted into pooled pixel buffers, spawned as `TerrainSprite` entities
 3. `update_tile_visibility` — toggles `Visibility` on sprites based on current `ZIndex` (camera z-level)
 
@@ -44,8 +44,16 @@ Three tiers, gated by distance:
 - **Tier 2** (4–8 chunks): provisional path + full path via async queue
 - **Tier 3** (>8 chunks): hierarchical chunk graph → async segmented A*
 
+**Stage 2 Collision** — when two entities target the same tile, the movement system resolves in four cases:
+- **Convoy**: entity ahead moves in ~same direction → follow-through, no avoidance
+- **Head-on**: dot product < −0.7 → both yield left (existing sidestep chain)
+- **E/S yield**: entity moving east or south → sidestep chain first, excuse-me on failure
+- **W/N right-of-way**: entity moving west or north → advance with excuse-me delay
+
 `PathfindingBenchmark` resource tracks sync vs async performance per frame.
 
+**Tile Change Invalidation** — `TileChangedEvent` fires whenever a tile's standability changes at runtime. `PathfindingDirtyChunks` collects affected chunk positions; `invalidate_paths_on_tile_change` clears paths for entities stepping through changed chunks within 8 steps.
+
 ### Entity Indexing
 
 Static terrain entities (floor tiles, fixtures, trees) are indexed in `chunk_entity_index: HashMap<IVec2, Vec<Entity>>` at spawn time. When a chunk unloads, the index is retrieved and entities are despawned. This is **O(entities in chunk)**, not O(total entities).
@@ -67,7 +75,7 @@ Mobile entities (dorfs, pigs, rabbits) are **not** in `chunk_entity_index`. They
 - `initial_chunk_radius`: chunks loaded around origin at startup (default: 7 → 15×15 = 225 chunks)
 - `spawn_counts`: dorfs, pigs, rabbits spawned at game start
 
-`tiles.toml`: tile registry — floor tiles, fixture tiles. Each tile has `id`, `astar_weight`, `can_stand_in`, `can_stand_on`, `transparent` flags.
+`tiles.toml`: tile registry — floor tiles, fixture tiles. Each floor tile has `id`, `astar_weight`, `can_stand_in`, `can_stand_on`, `transparent` flags.
 
 ## Status
 
@@ -76,7 +84,7 @@ Mobile entities (dorfs, pigs, rabbits) are **not** in `chunk_entity_index`. They
 - [x] Tile registry (`tiles.toml`) with A* weights
 - [x] Floor tiles, fixture tiles, item tiles
 - [x] Z-levels with quilted GPU sprite rendering
-- [x] Tile occlusion / visibility raycasting
+- [x] Tile occlusion / visibility raycasting (treats absent tiles in loaded chunks as air)
 - [x] Forestry: tree trunks + leaves spawned per chunk
 - [x] Dorfs, pigs, rabbits spawning at startup
 - [x] Hierarchical async pathfinding (3 tiers)
@@ -85,6 +93,9 @@ Mobile entities (dorfs, pigs, rabbits) are **not** in `chunk_entity_index`. They
 - [x] Camera panning + z-level control
 - [x] GPU texture pooling (pixel buffer reuse across bakes)
 - [x] Render chunk dirty-tracking for incremental rebakes
+- [x] Stage 2 collision resolution (convoy, E/S yield, W/N right-of-way)
+- [x] TileChangedEvent + path invalidation on tile change
+- [x] Rabbit digging (debug) — removes floor tile, replaces with air, fires occlusion + path invalidation
 
 ### Stubs (exist as empty functions, wired into schedules)
 - [ ] Foliage generation per chunk (`generate_chunk_foliage`)
@@ -95,18 +106,18 @@ Mobile entities (dorfs, pigs, rabbits) are **not** in `chunk_entity_index`. They
 - [ ] Crafting, stockpiles, resource gathering
 - [ ] Needs, mood, stress systems
 - [ ] Job assignment and task automation
-- [ ] Building and construction (digging/mining)
+- [ ] Building and construction (beyond debug rabbit digging)
 - [ ] Combat and squad management
 - [ ] Item persistence and inventory
+- [ ] Dynamic chunk loading (player/NPC-centered, not just radius-at-startup)
 - [ ] Save/load world state
 - [ ] World history and procedural storytelling
 - [ ] UI (menus, z-level overlay, workshop assignment)
-- [ ] Dynamic chunk loading (player/NPC-centered, not just radius-at-startup)
 
 ## Building
 
 ```sh
-cargo build   # dev profile, ~1.2K warnings (pre-existing)
+cargo build   # dev profile
 cargo run     # dev mode
 ```