Theoretically there are several reason why a 5MP sensor would produce a better 2MP image than a 2MP sensor.
If the stream is internally processed until the encoding stage at 5MP, there will be quantization errors introduced by virtually every DSP operation. At its core, DSP performs some mathematical function on the pixels in the image, which are replaced by the new values.
Pretty much most of the time you multiply two numbers together that have a decimal point, you end up with more digits to the right of the decimal place. More pixels is like more decimal places. So with the 5MP pipeline you don't have to "round" at every step, but only once when you downsample.
Also pixels and sub-pixel choices will be better as algorithms have the additional oversampled information during downsampling.
That said I have no idea whether it is a noticeable difference or not, but even if it is I doubt it's worth paying for.
Also keep in mind it's possible to end up with a worse image as well, due to the better low-light abilities of larger pixels.
Easy enough to test...
1, interesting question.
From our testing, it is unlikely to have a material benefit. Also, as 2 says, in low light, it is likely to be worse taking a 5MP and running it at 1080p than just buying an equivalent 1080p camera.
In terms of reason to doing it, some people say they might want to increase resolution later. I don't think it's a great idea though. In general, buy the resolution you want to use now.