I almost did the same with my DDs. Dd1 wore a beautiful smocked silk dress and I thought it would be nice if dd2 wore it but I changed my mind when I realized that I'm going to keep the dress and give it to my DD when she's older. I want them to have their own.
So to answer your question I wouldn't. Especially since it doesn't fit.
Well, since you asked, I think the sentiment of wearing his brother's suit means more than the fit. IMHO suits look ill-fitting on babies generally anyway. I guess it is kinda big, but a better-fitting suit wouldn't make a big difference to me. They wiggle out of place and have no neck for a collar. And then the pants always ride up. Am I the only one?
It's a bit big, if it's so special to you maybe you should get it altered so it will fit him.