is it technically possible to replace a 2.9 cc engine with a smaller 2.5 cc

Your question gave you the answer. The same make and model came with both engines.

That really depends on to what extent you are willing to go. The entire operating system in your car is for a specific engine and will not operate any other engine. There will also be mechanical differences that will have to be modified. When it's all said and done, it's against federal law to attempt it in the first place because this is an emissions certified vehicle and cannot be modified in any way legally.

Wrenchtech, the question stated that both engine sizes were available for that year, make, and model. When I was performing smog tests, as long as the engine was available for that particular vehicle (year, make, and model), and was the same year or newer, the swap was legal.

Second, notice the particular model being asked about, the Terracan. This vehicle is not available in the U.S. This means our laws don't apply to it. Other than that, you are correct.

elwalid, what country is the vehicle in? In order to perform this engine swap, you will either have to change the computer, or have it completely reprogrammed with the correct parameters for the "new" engine.

Yep, the non US part got by me. I don't believe there is any way the wiring harness will be even close though.

That is a possibility, as well. If he's lucky, they will be. I'm guessing he may have to either add or delete some sensors and stuff.

[quote]I'm guessing he may have to either add or delete some sensors and stuff.[/quote]

That's the stuff that is unacceptable and the reason it should never be attempted.