do i really need 3" exhaust

Flow is proportional to the 4th power of the radius. Some folks may presume that a pipe 1/2 the size of another pipe would flow 1/2 as much. This is incorrect. 1/2x1/2x1/2x1/2=1/16
So a 2 inch pipe would flow 1/16 of what a 4 inch pipe would flow. Just FYI.