Waste pipe 4" to 3"? Bathtub tiling flange Q...

Where the bathtub meets the surround, there's a ~1cm tiling lip (?). What should fill this gap? A strip of greenboard or something?
Also, the toilet is currently drained by 4" cast iron (original, house was built ~1957, Toronto, ON, Canada). I'm going to swtich to ABS with a low-flush toilet. Is it preferable (for flow-rates, etc.) to use 3" ABS? It's about a 12' straight run to the basement floor.
TIA (again), Darryl.
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The bigger and newer the pipe, the quicker it will refill.

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