2 full posts and the older are excerpts

Using the WordPress Default theme, in the wp-content/themes/default/index.php, change from this:

<?php if (have_posts()) : ?>

		<?php while (have_posts()) : the_post(); ?>

			<div <?php post_class() ?> id="post-<?php the_ID(); ?>">
				<h2><a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php the_title_attribute(); ?>"><?php the_title(); ?></a></h2>
				<small><?php the_time('F jS, Y') ?> <!-- by <?php the_author() ?> --></small>

				<div class="entry">
					<?php the_content('Read the rest of this entry &raquo;'); ?>

to this

<?php
$count=0;
?>

	<?php if (have_posts()) : ?>

		<?php while (have_posts()) : the_post(); ?>

			<div <?php post_class() ?> id="post-<?php the_ID(); ?>">
				<h2><a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php the_title_attribute(); ?>"><?php the_title(); ?></a></h2>
				<small><?php the_time('F jS, Y') ?> <!-- by <?php the_author() ?> --></small>

				<div class="entry">
					<?php
					$count++;
					if ( $count < 3) {
					the_content('Read the rest of this entry &raquo;');
					} else {
					the_excerpt();
					}
					?>

Great! I will test it, but reading the code I can see it will work.