What happens to #2 if a formation flight violates a FAR?
In the eyes of the FAA, the wingmen are individually responsible if they violate an FAR, even if they are led into it by lead.  

The controlling NTSB decision is:

3 N.T.S.B. 3302, NTSB ORDER NO. EA-1560, 1981 WL 40208
Administrator
v.
MERRELL R. GOSSMAN, EDWARD J. MODES, AND HOWARD MORGAN, JR., RESPONDENTS
Docket No. SE-4591, SE-4592, SE-4593
Adopted February 13, 1981



  As the law judge stressed, each pilot-in-command of an aircraft “is
  directly responsible for, and is the final authority as to, the
  operation of that aircraft” and each pilot has the affirmative duty
  to comply with the minimum altitudes prescribed by section 91.79,
  which contains no exception for aircraft in formation following a
  leader.