I assume that by "universal categorical quotient" you mean a morphism $f\colon X\to Y$ that is a categorical quotient, and stays so after any base change $Y'\to Y$.

Then the implication (1)$\Rightarrow$(2) is obvious, and for the other, take any $G$-invariant morphism $g\colon X'\to Z$, and an affine covering $U_i$ of $Y$. Call $f'\colon X'\to Y'$ the base change of $f$.

For any $i$ the map $f'^{-1}(U_i)\to U_i$ will be a categorical quotient by (2) since it is an affine base-change of $f$, and so the restriction $g|_{f'^{-1}(U_i)} \colon f'^{-1} (U_i) \to Z$, being $G$-invariant, will factor through $U_i$. Since this factorization is canonical, those with different $i$'s will be compatible in the intersections (cover it with affines), and in the end you get a (unique) factorization $X'\to Y'\to Z$ for $g$, showing that $f'$ is a categorical quotient.

densesubcategory and see what happens. $\endgroup$ – Martin Brandenburg Oct 27 '11 at 13:04