Wondering if it's fine to use line posts that are 1.66in instead of 2 3/8 terminal posts to build a 3ft fence. It's going to be framed in wood with some hogwire/welded wire wood panels so there will be a good amount of weight.
I don't think the diameter of the post is the limiting factor. It will be more likely to be the length of the post in the ground. If you are installing in soil with a 6' (2 M) long post and you want to have 3' (1 M) above ground that leaves less than 3' in the ground. The most likely thing is that the posts will lean due to the weight of the panels.
Where I live frost heave makes fences lean and posts pop out of the ground if you don't have enough length in the ground. Your area may have different conditions so you should consult your local building store to find out how much of the post should be in the ground. If you want to build to last back filling the post hole with concrete after you have the post straight is mandatory.
If you could get 8' line posts this should work but 6' posts might lean in a few years due to the weight of the panels.
If you are going to frame your fence/fencing wire with lumber, I would most certainly use pressure treated posts. I insist on 6X6 if not 8X8 posts for all my out door construction, not so much for structure but for aesthetics. 4X4 posts look wimpy but they will offer more structure than t-posts. This is akin to building a beautiful home on pier blocks instead of a real foundation worthy of that home.
What I do where I live with stupid pumice soil is to use sonatubes, filled with concrete and install post anchors. For today's pressure treated lumber you have to put a membrane between pressure treated post and the anchor unless that anchor hardware is powder coated. Pressure treated lumber will amazingly, 'melt' the hardware within a year, I kid you not! I witnessed this.
You could use 'gabions' instead of posts if you have access to lots of rock on your property. They are pretty cool and very very structurally sound. And they look solid as heck, cause they are. These are simply cages filled with rock for each corner of your of your project.
If you are going to go through the work and expense to frame your field wire, I would not skimp on the posts. I never specify 4X4's for outdoor structures but when not rich 4X4's are far better than t-posts!