It depends on the tubing type whether you specify OD or ID, but most pipe you'll come across is sold by OD. trangely enogh though, 1 2.5" pipe isn't actually 2.5" ID or OD. Check this page [url[http://www.engineersedge.com/pipe_schedules.htm[/url]. Schedule 40 is the pipe you'll normally get, other ones are usually special order and minimum length. So no size seems to work in schedule 40.
I would try a muffler shop, they have pipe expander tools and should have no problem. The chrome will be ruined at the expanded part.
You should be able to get a reducing ring at a bike shop, but I've never had good luck with them as there's always a leak through the gap.