
Both circles sit snugly in opposite corners of the square, each tangent to the two sides meeting at that corner, and they touch each other. A quick way to solve this is to work along the diagonal of the square that passes through both corners, $W$ and $Y$.
Simplify the left side: $$4\sqrt{2} - \sqrt{2} - r_2\sqrt{2} = 3\sqrt{2} - r_2\sqrt{2}$$ So the equation becomes: $$3\sqrt{2} - r_2\sqrt{2} = 1 + r_2$$ $$3\sqrt{2} - 1 = r_2(1 + \sqrt{2})$$ $$r_2 = \frac{3\sqrt{2} - 1}{\sqrt{2} + 1}$$
Multiply numerator and denominator by $(\sqrt{2} - 1)$ to rationalize: $$r_2 = \frac{(3\sqrt{2} - 1)(\sqrt{2} - 1)}{(\sqrt{2} + 1)(\sqrt{2} - 1)} = \frac{6 - 3\sqrt{2} - \sqrt{2} + 1}{2 - 1} = 7 - 4\sqrt{2}$$
This matches the coordinate-geometry method exactly, confirming $r_2 = 7 - 4\sqrt{2}$ cm, about 1.34 cm.
\[ \boxed{r_2 = 7 - 4\sqrt{2} \text{ cm}} \]