My 2.5 year old snores loudly and breathes thru mouth when sleeping? Is this normal or reason for concern?

Concern. Generally this does not happen at this age. Although not an emergency, you should see your pediatrician for the cause.Usual causes include allergies and / or some sort of nasal obstruction.
Reason for concern. It is not normal for a 2 year old to snore loudly. It is a sign of a resticted airway. Please talk to your pediatrician, who may recomment an ENT to evaluate the airway, tonsils, etc. Proper airflow is important for growth and development.