Kerry lost the battle in Navan but remarkably still made it through to the Joe McDonagh Cup final thanks to Padraig Boyle's 77th minute point in their 0-28 to 1-21 loss to Meath.
The Meath win, the Royal County's first in the competition, left all three Group B teams tied on two points each after two games.
That meant scoring difference kicked in and while Meath were eliminated to third position in the table on that count, Kerry and Down were still locked together on +2.
The next method of separating the teams was their scores for over the two games and both Kerry and Down were deadlocked again on 3-45 (Kerry) and 2-48 (Down) - exactly 54 points each.
Under this year's competition regulations, a further method of separating the teams kicked in - total goals scored in the campaign - and it was on this basis that Kerry progressed to face Westmeath next Saturday.
Boyle's point, ensuring a mere four-point defeat, made it all possible because a five-point Kerry loss would have sent Down through to the decider instead.
Despite the defeat, a much improved Meath will hope to carry the momentum on into next weekend's McDonagh Cup relegation play-off with Kildare.
This was their best performance of the season with Jack Regan scoring 0-11 for Nick Weir's side and Patrick Conneely weighing in with 0-06 from play.
The teams were level 11 times but a strong Meath finish, outscoring Kerry by 0-10 to 0-03 from the 56th minute, sealed the win for the hosts.
Meath struggled in the league, recording just one win from five in Division 2A and lost their opening Joe McDonagh Cup game to Down by eight points.
Yet they still retained an outside chance of not just retaining their status in the competition but of finishing in top spot if they won by a big margin.
A draw would have been enough to secure outright top spot for Kerry and, for a while, it looked like it might pan out as a stalemate with the sides level eight times up to the 27th minute at 0-10 apiece.
Shane Conway accounted for seven of Kerry's scores in that period, all of them coming from placed balls, as Meath were consistently punished for foul play.
Cian Hussey's goal eight minutes before the break put daylight between the teams for the first time, the corner-forward stroking home off the deck after Shane Nolan's clever lay-off.
Meath won a 34th minute penalty following a Brendan O'Leary foul on Stephen Morris - earning O'Leary 10 minutes in the sin-bin - though Regan's strike was saved
Hussey's goal was all that separated the teams at half time with Kerry, who beat Meath by a goal when the sides met in the league in May, leading 1-13 to 0-13.
Meath upped the ante considerably in the second-half and reeled off five points in-a-row in the third quarter to take the lead, 0-18 to 1-14.
Kerry rallied again with four points in-a-row from Conway, Mikey Boyle, Maurice O'Connor and Bryan Murphy but were heavily outscored from there on as Meath rallied.
The Royals lost James Toher to a 76th minute dismissal following his second booking and there was more drama still to come as Padraig Boyle sent over that crucial score for Kerry at the death from a long-range free.
Meath: Charlie Ennis; Ger Murphy, Shane Whitty, Sean Geraghty; James Kelly, Darragh Kelly, Keith Keoghan; Stephen Morris, James Toher (0-01); Ian Birmingham (0-01), Jack Regan (0-11, 0-05f, 0-02 65, 0-01 sl), Mark O'Sullivan (0-01); Patrick Conneely (0-06), Alan Douglas (0-03), Adam Gannon (0-01).
Subs: Sean Quigley (0-02) for Conneely (49), Shane Brennan for Kelly (53), Padraic O'Hanrahan (0-02) for Morris (53), Eamonn O Donnchadha for Douglas (59), Michael Burke for O'Hanrahan (63-66, blood), Callum O'Sullivan for Regan (73).
Kerry: John B O'Halloran; Eric Leen, Tomas O'Connor, Evan Murphy; Jason Diggins, Fionan Mackessy, Conor O'Keeffe; Paudie O'Connor, Shane Nolan (0-02); Mikey Boyle (0-01), Daniel Collins (0-01), Brendan O'Leary; Shane Conway (0-10, 0-08f, 0-01 65), Padraig Boyle (0-04, 0-01f), Cian Hussey (1-01).
Subs: Maurice O'Connor (0-01) for Collins (ht), Bryan Murphy (0-01) for O'Connor (45), Michael Leane for O'Leary (51).
Referee: Shane Hynes (Galway).