That's my point. Sorry I miscommunicated. Instead of:
When sprite1 overlaps sprite2
+Sprite2 animation = "1" = destroy Sprite2
Try
When sprite1 overlaps sprite2
+Sprite2 animation = "Animation" = destroy Sprite2
You're correct, it's a bug, I meant to explain it - that construct always reports the animation name as 'animation' which is why the event doesn't work.