I'm not understanding how to manage the 2nd display, no matter what I set the \\.\DISPLAY1 dropdown to it creates the region on display1.

After reseting my regions and exiting keyclone...
[regions]
count=0

Starting keyclone I found 1 region auto-defined as full screen display 1.
[regions]
count=1
region_name_00=''
region_00=1,0,0,1280,1024,0,0
region_pip_00=0,(0.0.0)

I selected \\.\DISPLAY2 from the dropdown, and clicked the [+] button to add a region. It created a 'region1' 50,50,800,600 region. Display dropdown is still set to \\.\DISPLAY2 but I'm still seeing the green field at 0,0,1280,1024 showing the full region.
[regions]
count=2
region_name_00=''
region_00=1,0,0,1280,1024,0,0
region_pip_00=0,(0.0.0)
region_name_01='region1'
region_01=1,50,50,850,650,0,0
region_pip_01=0,(0.0.0)

So if I'm seeing this right the region_0# defines:
display,(x,y of top left),(x,y of bottom right),?,?

Is that right?