Andy,
That was the case when JAA started. Then, for a while, you could get a sticker for a Class 1 saying that it was valid as a Class 2. Now you don't need that sticker; when it lapses, you can use it as a Class 2, for as long as the Class 2 would have been valid (ie from the date of the actual medical). I am ABSOLUTELY CERTAIN of this. I've done it several times...got a Class 2 as a PPL, then a Class 1 to make sure I could before starting CPL exams, lapsed to a Class 2, got a Class 1 to get my CPL, lapsed to a Class 2, got a Class 1 to get my FI rating. I've done it under all the sets of rules. I've checked it with the CAA and my AME. Trust me, this is how it is...unless it changed again very recently, and I don't think it did.