I have a need to drop the butt of my K3500 a couple of inches to get my 5th wheel to ride level. Has anyone done this?

May be cheaper to add some .25 wall 2 inch tubing between the axel and the spring on your 5th. That is assuming that the spring is over slung. If it's under slung move the axle below the spring to gain the height. As to your desired path I think there are some shackle systems (velvet ride?) available to lower the truck.

Will a bigger tire fit the 5er? It may be all you need, if there is room...

I installed the Velvet Ride shackles on the rear of the truck. They drop the rear 1.5 inches. I did this on my 2500HD. They do help the ride when the truck is empty as well. Think they are 4150 or so and take about 1.5 hours to put on.

PS don't forget to re-aim your headlights.

Most people in this situation 'flip' the axles on the camper to raise it. I had to do this one mine. Take a bit of time but it worked out really good.

The axles are already mounted under the springs on the 5'er. The camper is now at 11'10" high and I would prefer to not go any higher. I had heard about the velvet-ride shackles and have considered them. I was wondering if I install them wouldn't the overloads be constantly riding on the bump stops??

You could relocate the overload stops...