The dealer shouldn't be getting involved like this imo.
The dealer is responsible for keeping the game running amd should be asking player 1 to show or muck. If I was sitting at the table I would not appreciate wasting my life while waiting for some dick to turn over some cards.
But the player has made it pretty clear he doesn't want to show and wants to muck his second card. The dealer should therefore muck it rather than hand it back.