Is that a VAR head tube facer? I'll check against my old one later to confirm. I, too, think it's missing the ID reamer cutting element/shell. Also note the wear on the black shaft to the right of the facer cutter. This is likely from the inside of the head tube, so Eric's suggestion that it and the silver part with the set of flats are on the wrong sides of the cutter is likely correct. As to the adjustable reamer accommodating a larger cut then labeled, you'll find out easily enough. Usually depends on how many threads are still within the end/trapping nut.

Well I'm wrong on the order of the sleeves on either side of the facer cutter. Here's a shot of my VAR tool (and your's is also a VAR). Clearly the silver sleeve with the flats goes under/to the left of the cutter. As to the reamer shell. Perhaps contacting Wayne at Mel Pinto (the importer for VAR) will help you find one. Andy