Actually, just one up-arrow is the same as exponentiation.
3^3 = 33 = 27
3^^3 = 3^(3^3) = 3^27 = 7625597484987
3^^^3 = 3^^(3^^3) = 3^^(7625597484987) = 3^3^3^3^3...^3, where the number of threes is 7,625,597,484,987.
So 12^^2 = 12^12 = 8916100448256, which is much larger than 1000^^1 = 1000. The inequality doesn't hold for n=1.
Generally, 1000^^n is 1000^1000^1000^...^1000, where the number of 1000s is n.
You solved puzzle 2 2^^^....^2 always equals 4, no matter how many up-arrows you have.