Re: engine swap
Can you stuff 5 lbs of spit into a 3 lb bag?
3.0/2.5 There is a difference, although many parts ARE interchangable I'd have to hit the books to see if there if the major change was cyl bore alone or if there was any stroke change.
You may get away with just buying a set of pistons, rings and gaskets and swap away.
First find the cause of the water into the oil, it could be as simple as a head gasket, and a lot cheaper. If it is a cracked head you do not want to re-use that head on the 2.5, so just replace it on the 3.0 and keep the extra hp instead of dropping to the 2.5
If it is a damaged block, well, GOT TO find out the damage before you can decide on the cure.
Good Luck and hope for just a warped head!