Solved! Go to Solution.
However, I was expecting something else:
1- When Test1 received a mail, Test2 will have a folder show up marked "Test1"
That's not how mail delegation works, so why were you expecting that? Have you seen some documentation that suggests that's how mail delegation works?
2 - That Test2 will have the option to send mail with a drop-down menu allowing the choice between the two accounts.
When Test2 is accessing the Test1 mail they can send directly from that account as Test1.
If you want what you describe then you can actually have it but it doesn't use mail delegation at all but automatic forwarding, filtering to a label, and the send as option; the big issue with that approach is if Test2 wants to send as Test1 and Test1 needs to see the sent mail that Test2 sent as Test1 then Test2 needs to remember to CC/BCC Test1 (as there's no connection between the accounts) and the recipient may be able to see that it was sent by Test2 (whereas with delegated access you have the option to ensure Test1 is seen as the sender).
Delegated access is designed for real people who will be accessing the accounts and need to allow someone else to see their mail to check it and respond on their behalf (e.g. manager and the manager's assistant). If you're trying to do something else then there may be better approaches but trying to keep Test2 in only that account means you need to put something in place to ensure that Test1 can see the mail sent by Test2 on the behalf of Test1.