I just received the Flowmaster exhaust kit 17107 w/o mufflers and was surprised that the inside diameter of the pipe itself is 2 5/16 where as the flowmaster mufflers I intend to replace shortley with Dynomax are 2 1/2. So would it be more accurate for flowmaster to advertise it as a 2 q/4 inch system or is this just how it is in the exhaust pipe businee?

I believe it's common practice to rate exhaust pipes by outside diameter.

Yep

All exhaust pipe is measured by outside diameter (OD)

All mufflers are measured by inside diameter (ID)