The two boats were the only ones remotely near me, I expect they were badly trailing the pack.
Re 1 - I was close to a race course, which made me more attentive of the actions of the two boats, intending to defer to their actions. Boat 1 headed up with plenty of room - no problem. Boat 2 maintained Port to me tack. If I dropped down, I'd be crossing its bow and impeding its intended course, thereby impeding its race progress.
Re 2 - I was at the helm, disengage means hit the standby button, maybe 2-3 seconds between reaction and execution. I regularly disengage in close traffic. In this case I wanted maintain direct course showing my intentions.
It was not until the 'last possible second' there was an urgency imposed by the Boat2 action, and no reasonable expectation that manual evasive action would be required.
Thanks for the replies, I was looking for insight as to racing attitude, inferring from the Boat 2 skipper reply "we're racing" that I was missing something.