My thinking was buy running a smaller nozzle it may help my pumps slight cavitation problem out of hole.
Indeed.
Increasing bowl pressure and therefore the pressure on the back side of the impeller by restricting the pump discharge (nozzle) will reduce cavitation.
Increasing nozzle size does not increase the pump's demand for water. If the engine and impeller combination are able to push more water, a larger nozzle will allow the entire system to process more water.
Another thing to look at is the intake opening, biting edge, et al. Configuring pump hardware is a balancing act represented by (P1 * V1) = (P2 * V2) where P = pressure and V = volume. Think of the impeller as the "=".