The cross over pipe speeds up exhaust velocity. Picture each exhaust bank firing alternatively, each exhaust pulse travels down the pipe creating a low pressure area behind it. The faster these pulses can travel the lower the pressure is behind it. This low pressure area helps to "suck" the next pulse along behind it. With each two revolutions of the crank, you have three pulses down each pipe at regular intervals. With the X pipe, you add an extra "half" pulse to each bank as well as increasing the low pressure area behind it in it's original pipe. This adds to the scavenging effect thus making more room for clean air. As the exhaust pulse travels through the X pipe, it is closer to the pulse in front of it from the opposite bank so this "sucks" it along a bit quicker. It also creates more low pressure behind it in it's original pipe as it is now moving faster.
And with the twin 2 1/4" question, yes, twin into a single 3" will be enough, unless you stroke it and blow it.