Yes, it is possible for children to drink too much milk. If your son is drinking a gallon of milk a day, that's a lot of calories for him to be taking in from just one food source. And water is so important to our overall vitality and health that it really should be everyone's drink of choice. Anyway, I can't remember how much a 1 and 2-1/2 should be drinking of milk but you may want to check with your doctor to see what he recommends. To get your children to transition to drinking more water, I would suggest one of two things:
#1: Slowly but surely start watering down your sons' milk so that eventually their taste preference for milk vs. water will change.
#2: Start giving them water that has a squeeze of fresh orange in it for flavoring or, if you want to add a splash of fruit juice to the water, keep an eye on how much juice you are actually giving them and check the ingredients label to makes sure that it is 100% fruit juice.
Good luck on your transition.