R2 vs R3

The problem with doing both essays and GMAT at the same time is that, more likely than not, you'll end up doing an 'OK' job on both, but neither will be up to your potential. In the hyper-competitive game of MBA admissions, a so-so GMAT combined with so-so essays are unlikely to lead to anything but so-so outcomes. (At best)

You should think about what you would find more distressing -- waiting a year, or not going to your top choice.

Everyone has said pretty much was I was already thinking. Seems that to really get the best outcome it's worth it to study longer and take the gmat later in the year and just apply to schools' R1 in the fall. I think that offers the best chance of getting into a good school that matches my interests.

I think I may just look for a new job as well to provide a different environment in the mean time. A year and half is a long time to stay somewhere you don't feel fulfilled.

Just a few things you may want to note:
1) Schools prefer to have one of your recommendations come from a current supervisor. If you start looking for a new job now and manage to start by say Feb 1, you are going to only have worked 6-8 months before you have to ask for a recommendation. So you are going to have to tell him/her you are leaving just as your are becoming valuable to them (my jobs have had around a 6 month learning curve, you or your industry may be different). In that situation, your supervisor could be upset and, possibly more importantly, not know you that well. Their opinion of you will be based on you learning a job rather than leading/contributing.
2) The application process takes an amazing amount of time and it's nice to have a job that you can coast at. By chance, my first half of the year was really busy and I was able to "bank" on my early year utilization in the past few months.

Also, jobs aren't supposed to be fulfilling...

I totally agree with DuckPond. Although, I can really sympathize with you Amy84. I'm basically in the same boat as you. I graduated in '08 and was working at a top ibank, doing what I wanted to do. Unfortunately, the market collapsed and I got laid off after just under a year of work. It was really difficult to find another job quickly since no one in finance was hiring. I ended up at a firm that does public finance and carbon credit development. It's not a bad gig, but I know it's not what I want to do and the work isn't really challenging me. After the market has recovered a little, I was caught btw sticking it out and applying in the fall of 2010 or just trying to find another job.

Here's what I decided I'm going to do about this dilemma. I've started to update my resume, once I'm done I'm going to start looking at job postings. If I see something that really interests me I'll apply. And if I get a job I'll decide if it's worth putting bschool off for I'd go for it. In the meantime, I'm going to prepping for my GMAT, dedicating more time to volunteer activities and researching schools since my job is not that challenging. I've also started registered for the CFA, exam since I want to go into equity research after my MBA.

I really don't think rushing through your GMAT preparation and essays is a good idea, unless you're confident in your abilities to get everything done on time. Why don't you hold off until next year. In the meantime, try to find something outside of work that interests you and dedicate more time to it; that will take your mind off your job and be good for your app? Also, you don't sound like you really know what you want to do with your MBA. Why don't you do more research on it, so you're not just applying to get out of your current job. Perhaps you'll find that you don't even need an MBA to accomplish your career goals.