The augmented reality head-up display (AR-HUD) attracts increasing attention. It features multiple focal planes to display basic and AR information, as well as a wider field of view (FOV). Using two picture generation units (PGUs) to create dual-focal AR-HUDs leads to expanded size, increased cost, and reduced reliability. Thus, we previously proposed an improved solution by dividing one PGU into two partitions that were separately imaged into two virtual images with an optical relay system. However, the resolution of the PGU was halved for either virtual image. Regarding the drawbacks, this paper proposes a dual-focal AR-HUD using one PGU and one freeform mirror. Either virtual image utilizes the full resolution of the PGU through polarization-multiplexing. By performing optical design optimization, high image quality, except for the distortion, is achieved in an eyebox of 130 by 60 mm for far (10 m, 13° by 4°) and near (2.5 m, 10° by 1°) images. Next, we propose a distortion correction method by directly inputting the distorted but clear images acquired in the design stage into the real HUD with an inversed optical path. The proposed optical architecture enables a compact system volume of 9.5 L, close to traditional single-focal HUDs. Finally, we build an AR-HUD prototype, where a polarizing reflective film and a twisted nematic liquid crystal cell achieve polarization-multiplexing. The expected image quality of the two virtual images is experimentally verified.