How can I get an tag to wrap each ancestor that gets outputted in this condition?

To wrap your titles in h2 just change echo $ban_titles; to echo '<h2>'. $ban_titles . '</h2>';.

If you want to limit number of titles displayed to 2 change for($i=0; $i<count($pages); $i++) to for($i=0; $i<2; $i++).

Hope it helps, PHP is not so scary after all 🙂

[edit]

How about that?

    //This is the loop that pulls banner titles
function print_page_parents($reverse = true){
    global $post;

    //create array of pages (i.e. current, parent, grandparent)
    $page = array($post->ID);
    $page_ancestors = get_ancestors($post->ID, 'page');
    $pages = array_merge($page, $page_ancestors);

    if($reverse) {
        //reverse array (i.e. grandparent, parent, current)
        $pages = array_reverse($pages);
    }

    $i = 0;
    if(count($pages)==1) {

    echo '<h2>'. get_the_title($pages[$i]) .'</h2>';

    } else {

    echo '<h2>'. get_the_title($pages[$i]) .'</h2>';
    echo '<h2>'. get_the_title($pages[$i+1]) .'</h2>';

    }

 }