We report energetic ion and electron, wave, and ambient plasma observations from two sounding rockets which were launched from Churchill, Canada, into the expansive phases of two auroral substorms and which passed through source regions of transversely accelerated ionospheric ions (TAI). The two events were observed at low altitude (400--600 km) and resulted in ion energization of hundreds of electron volts. In the acceleration region, the ionospheric ion velocity distribution function in the direction perpendicular to the local magnetic field (⊥B) displayed a distinct, non-Maxwellian, high-energy tail, suggesting ion cyclotron heating. The plasma density was lower than theoretical quiescent values, by as much as 2 decades in the stronger event. Strong thermal ion drift was observed in the perpendicular (⊥B) direction, but was absent in the parallel (∥B) direction. Large-amplitude, low-frequency fluctuations in plasma density were present, and a number of wave modes were observed, including upper hybrid and Langmuir waves, and whistler, ion acoustic, and ion cyclotron waves. No consistent correlation existed between the energetic particle precipitation and the TAI. However, strong field-aligned electron enchancements were observed at times coincident with the TAI acceleration region. The characteristics of the TAI ion energy spectra were consistent with a simple model of ion cyclotron acceleration and energy loss due to ion-neutral collisions. These observations are discussed in terms of current theories on electrostatic ion cyclotron acceleration and lower hybrid acceleration.