Yes, the rabbit escapes. Suppose, just for clearness, the diagonal of the square is $2$, hence the square side is $\sqrt{2}$. The rabbit chooses a vertex of the square, say $V_1$ and heads straight towards it. Denote the other two vertices that are neighbors of $V_1$ as $V_2,V_3$. If the rabbit would bump $V_1$, the wolves at $V_2,V_3$ would have been at distance more than $\sqrt{2}-1.4$ from the point $V_1$. So, the rabbit, when at distance $\varepsilon$ from $V_1$, changes its direction to be perpendicular at the diagonal, it has been moving through so far, and heads to that side of the square that's free of the wolf at $V_1$ (if that wolf is still at $V_1$ it doesn't matter which one). If $\varepsilon$ is small enough, it will escape.