What is the purpose of this two pin component (circled)?
It looks to me like a jumper, but it seems strange that it would be so complex for just a jumper (that apparently does nothing). Sits between an AC input and a bridge rectifier.
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It's a solderless spade connector, soldered to the PCB.
Like this: http://www.keyelco.com/product-pdf.cfm?p=681
(www.digikey.com Keystone: 3547)