Is Pinacol rearrangement the source for the ring expansion?
Your first and third structures are good but the arrow pushing in the second structure doesn't get the job done. As you have noted, diol 1 forms carbocation 2a the more stable of the two options. Now the lefthand cyclopropane bond with its pair of electrons migrates to the cationic center to form resonance-stabilized species 2b and on to ketone 3. This type of structure is a candidate for a Nazarov cyclization. The arrows in 4 may be drawn in the other direction as well. Rearomatization of 5 by loss of a proton and tautomerization leads to the product 6. [Note: Structures 2b and 4 are identical. Just a reprotonation of 3.]ADDENDUM: To answer your original question, yes it is a pinacol rearrangement. The bond that migrates (2a --> 2b) just happens to be attached via the cyclopropane ring to the site to which it is migrating. So, 1 --> 3 is a pinacol rearrangement.