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Three grains of Red Dot is a light target load for use in revolvers. It is entirely possible that a metal jacket bullet won't make it out of a rifle barrel.
While it is possible that the original .25 barrel was rechambered without reboring, it seems very unlikely. Reboring and rerifling those old .25-20 and .32-20 barrels was common, since most of them looked like sewer pipes after 50 years of corrosive primers.
By all means make sure everything is OK, then go right ahead and fire standard .38 Special loads. If the rifle had been kept in the original caliber, it would be nothing but a wall hanger due to (most likely) a bad barrel, plus the cost of the ammo today.
Jim
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