Yes, this is an issue.
The quiz form is sort-of logical in that if only one attempt is allowed then it does not let you set a way to combine grades from multiple attempts, but ignores the possibility of overrides.
There is one bug report MDL-37998, in relation to another quiz setting, but it is basically the same thing.
I think this work-around works:
- On the quiz settings form, set Max 2 attempts and the grading rule you want.
- Save changes.
- Then edit the quiz settings again and set it to 1 attempt.
- Save changes.