Hi Trish, welcome to KH. Baby sweaters are one of my specialties and I have come up against similar issues of wanting to change things. Others may weigh in with different ideas, but here are my thoughts.
If you work on a size that will give you the inches you need to make the 24 month using your new needles and yarn, you will still come up against some other problems. Any shaping will be a little different. They usually give shaping like for the neck over so many rows and with your gauge different it won't work out quite right. If it is a pretty simple shaping and you are experienced you may be able to adjust it so that it will work. You will need to think about the length you need to get for the 24 month size. I don't think you'll just be able to take the new size and knit it exactly as given. It is a little more complicated than that. It may be easier to find a pattern that is designed for the weight of yarn you want to work with.
Are you aware of Knittingpatterncentral
? It is a site that pulls patterns in from all over the internet and makes them available from one directory. Check out the sections on both "Baby" and Toddler' Clothing". The lit up word above is a live link directly to the page.
Another site I like real well for baby and childrens clothing is Drops Design/Garnstudio
. This is a Norweigan site that has many of their patterns translated into several languages. Click on the English/American flag on this page and follow directions to navigate the site. Some patterns are marked American English and some are in UK terms. They are not too different than ours and we can help you here if you are unfamiliar with them.
I hope something works out for you so you can knit the red sweater you envision. Knitting for grandchildren is so fun.