1) Very wrong.
2) Right (rare usage)
1) "... It's a privilege to have people listen to your views, and if people get them arse backwards sometimes, that's the price you have to pay ..." -- Alexei Sayle, comedian, satirist and Young Ones co-star, after apparently dissing his home city.
2) Bill: I put my trousers on arse-backwards today.
Ben: Well done. That's correct.