Or is it possible to reject the allocated school (school 1) after the offer (before the 15th March deadline)? Will that automatically get me school 2, without having to go to appeal? Or will I just be put on school 2 waitlist?
I doubt very much if this is at all possible to do so under Equal Preference System; but just in case it is, then that might be another option in hand to exercise.
NO!!! If you are given a higher preference school, you are not then put on any waiting lists for schools that are a lower preference. If you make any changes to the CAF (swapping schools) you will be classed as a late applicant so will only get an offer after National Offers Day, if there are spaces. I would ring your LEA obviously to confirm all this but suspect the only recourse would be to drop school 1 altogether (assuming your LEA doesn't count this as a change and class you as late.) Otherwise I think you have to wait till offer day and ask to be put on the waiting list for school 2(where assumedly you would be near the top) - possibly having to reject school 1 and possibly putting yourself in a situation where you might end up with no school.
The only people who can answer this categorically are the LEA and I would advise you try and have an email conversation with them so you have a record...