I ask because I've got a nasty feeling the hover: business might annoy and/or confuse the user, depending on exactly what you're changing.
Is div2 above or below div1? I mean of course in the z dimension, not vertically on the monitor ;) Will a hover in the area covered by div2-- the inner div-- be recognized as a hover over div1 --the outer div? The answer might be either Yes or No. The important thing is to make sure that the result agrees with your intention ... in all current browsers.
div1 isnt that much bigger than div2. I change the background colour of div1 and the image to show that it can be clicked. It works in every browser that I could get my hands on, apart from ie6 that is and as I have already abandoned IE6 I'm not going to lose sleep over it.