Multiple returns: Which one sets the final return value?

Yes, the language spec defines that "2" is the result. If a VM does it differently, it's not spec-compliant.

Most compilers will complain about it. Eclipse, for example, will claim that the return block will never be executed, but it's wrong.

It's shockingly bad practice to write code like that, don't ever do it :)

Yes, the Java Language Specification is very clear on this issue (14.20.2):

A try statement with a finally block is executed by first executing the try block. Then there is a choice:

• If execution of the try block completes normally, [...]
• If execution of the try block completes abruptly because of a throw of a value V, [...]
• If execution of the try block completes abruptly for any other reason R, then the finally block is executed. Then there is a choice:
  • If the finally block completes normally, [...]
  • If the finally block completes abruptly for reason S, then the try statement completes abruptly for reason S (and reason R is discarded).