The OP has stickied me with the query and the domain name and in this case I made an exception and had a look at it.
The domain ranking in SERPs (at #2) is framing another domain. As OP said, the page html of the parent (ranking) domain has nothing in it other than 100% frame. No meta tags, nothing - the HTML of the page is as OP said with the addition of the rows="100%" and no border attributes.
The SERPs show parent domain with <title> and meta description from the framed domain. The "cached" link shows the cache of the framed domain under the name of the parent domain.
The domain names are similar though and the whois shows the same owner. I am guessing that in this particular case the framing was done because of the need to drop the location from domain name (perhaps because of domain owner not knowing how to or not being able to execute 301 redirect). I conclude this because of the following.
The parent domain: BrandnameKeyword2.com
The framed domain: BrandnameKeyword2Location.com
The query for which the parent domain ranks is for:
Keyword1 Keyword2 Location
However, the website targets more locations (this is probably the reason for wanting to drop the location from the domain name).
So in this case Google is displaying the parent domain in SERPS despite parent domain not having any HTML other than frame and all SERPs info is pulled out of framed domain.
Perhaps the reason why Google behaves in this way is that there is the same whois and perhaps both domains may be in the same WMT account.
Because I would doubt that it would be so easy to "steal" the ranking from another site by purely framing someone else's domain.