Morning Richard,
You can buy a two and a half inch Forstner or self feeding bit. Electricians have them. They can be expensive, excess of a hundred dollars just for the bit, if you don't shop for them. I was fortunate and found a couple of them on sale at get them outa here prices.
If you dig your holes and set a piece of two inch galvanized pipe (2 3/8" o.d.) in each hole and leave it standing up about six to eight inches. Then you can drill your two and a half inch hole into the bottom of your post.
I would weld a plate to my two inch pipe coming out of the ground where I'd have no chance of the bottom of the post sitting in water. If you have help you could put some large galvanized lags through holes in the plate before you welded it up. This would allow you to bolt the post to the plate from the bottom. You would need help or something like a FEL to hold the post up as you tighten the bolts but you would have a great installation.
What I did on that installation I have linked to was to use matching rock that we used for the decking around the bottom of the post like a base board. That way the gap is there. It won't hold water around the post. And it looks good too, best of all worlds.
It's been my observation that wood usually starts deteriorating from the end grains first. So in a fence I go through a lot of trouble keeping the pickets off the dirt. I also like to use a cap board over the top of the pickets, to again keep the moisture from just sitting on the end grain and eating away.
When you build your wife's dream you might want to keep that in the back of your head. BTW don't whatever you do take your wife via the internet <A target="_blank" HREF=http://magnificentproperties.com/lake_fork_log_house_east_of_dallas__1_8_m>here</A>.
