Honestly, I would sell it and size up.
If you soak it like that, I doubt you will be satisfied with the result. You will have to really be careful. The results of water treatments are usually unpredictable.
If you do soak it, use cold water and then air dry. Once its damp, try and wear it with layers on, ie a jumper/sweater and another jacket for example - this could help to loosen around the chest and armpits.
I think it will constrict though once it dries, you can't wear it all the time. You may have to condition the leather after also.
Note: The knit will loosen and stretch out, so try to do this without getting the knit wet. The sleeves will shorten by 0.5" to 1", especially once you start wearing it in and creases develop. The back will likely shorten also by at least 0.5", due to creasing and also due to the leather drying in.
Not recommended.