240V circuit connection
Yes, you can replace the 30A breaker with a 20A breaker so long as you change the receptacles to 15-20A.  The breaker must match the receptacles.  The only exceptions are 15A receptacles are allowed on 20A breakers (and 50A receptacles on 40A breakers, not relevant here). 

It's OK to use oversized wire.  It's not OK to undersize wire.  If it doesn't fit on the receptacles, use a short pigtail of a smaller but still appropriate wire size.

It is illegal to re-designate a neutral (white or gray) wire to be a ground,  say, by taping it with green tape or painting it green.  NFPA's logic is that a future repairman might get confused, and wire is cheap so why not use the right colors in the first place.  A wire which is bare its entire length can only be a ground.  I'm just gonna leave that there.  

NEMA 10 receptacles are obsolete and dangerous.  The correct receptacle for "240V, ground, no neutral" is NEMA 6.