Human highlights reel Min Woo Lee lit up Royal Melbourne to be only a shot off the lead as his superstar playing partner Rory McIlroy briefly threatened to miss the halfway cut on a dramatic day two of the Australian Open.

When the dust finally settled on Friday, Australian big guns Lee, Adam Scott and a resurgent Cameron Smith were all within two strokes of the lead, while McIlroy was close enough to dream of making an unlikely  charge at a second Stonehaven Cup.

It shapes as one of the great weekends in Australian golf.

The stand-out moment of Lee's second round came when he holed out with a nine-iron from 176 metres for eagle on the par-4 10th, raising both arms and waving them in an aeroplane-style celebration.

"I know it was just random, but it just felt good," Lee said.

"It was a big crowd, so I was just doing random stuff."

Four holes later, McIlroy endured his lowest point when he had a rare air swing after his tee shot finished up under a ti-tree and he then clipped a branch on the backswing.

The Northern Irishman escaped with a one-putt bogey on the second easiest hole on the course and briefly slipped below the cut line.

But McIlroy showed his class to birdie three of the last four holes, signing for a three-under 68 to make the cut by three shots at two under.

"Honestly I can't remember the last time I had a fresh-air shot," McIlroy said.

"Not one of my finest moments, but it was nice to bounce back afterwards and play like I did in the last few holes."

Lee had four birdies to go with his hole-out eagle in a flawless six-under 65, which had him in outright third spot at eight under, a single shot behind Denmark's Rasmus Neergaard-Petersen (66) and Portugal's Daniel Rodrigues, who carded the day's low rounds of 64.

Former Masters champion Scott (66) rolled in a clutch par putt on the 18th to join countryman Smith (65) and Mexico's Carlos Ortiz in a tie for fourth at seven under.

Overnight co-leader Elvis Smylie (72)  was a shot further back.

"It was a great back nine for me today," Scott said.

"I was pretty patient all day and then a couple of good things happened and I put myself in the mix with a couple of days to go, which feels really good.

"It was like one of the great days of Australian golf, and (the atmosphere) on that first tee was incredible."

After a string of missed cuts in 2025 - including at all four majors - Smith enjoyed one of his best days of a difficult year.

The 2022 British Open champion roared into contention for a first Australian Open title, capping off a great day with a curling birdie putt on the 18th.

"It's definitely a relief, but I'm not here to make the cut," Smith said.

"I'm here to win the Stonehaven Cup and I've put myself in a position to do that."

It sets up a massive weekend at Royal Melbourne, with sellout crowds of 25,000 expected for each of the closing two days.

"This is what the Aussie Open should be; it should be like this every year, and there's no reason it can't be," Smith said.