well for one the headplates larger on a 2" and the headplate is what you have to create clerance for by trimming the tow hook hole in the fascia
additionally, a 2" without the steel between the shank and the chassis will not be far enough down to protrude through the fascia without cutting
the underside of the bumper above the tow hook hole
trying to measure and figure it in my head..
my 1.25 with 1.25 steel between it at the chassis has 0 clearance between the headplate and the bottom surface of the bumper above it
class II's or 1.25's have 2" head plates (.37" to shank on top side)
class III's or 2" have 2.5" head plates (.25" to shank on top side)
for flush with bottom of the bumper you'd only reduce the spacer steel by 0.12"
of course this is only applicable if you've got the same front fascia that I do
in other words - if you use the same drop that I did and have the same front fascia that I have and used 1.25 of spacer steel then you would have technically 1/10th of an inch more clearance at the top where I have 0 clearance, and have to trim 0.6" more at the bottom than i did
in other words, yes you can use a 2" , can you use a 2" or a 1.25" without the steel spacing without cutting a hole in your fascia? no
takes 1.25" spacing to get a class 2 down to the tow hook hole, takes 1/10th of an inch less to get a class 3 down there
but as you see from Cali KJ, if you're willing to make a cut, it doesn't matter where it comes out you can stick a Class V in there if you want!
Hope this helped!
again those measurements are only fully accurate if you've got the same fascia