Checkout
www.duactipaso.org it's been done on both the Paso models (750 & 906) that came with 16" rims. The Sport models are pretty close to the Paso.
There are some decent 16" tires available on the market, but they may require some modifications, like moving the sprockets to allow the chain to clear the sidewall and raising the front fender to clear the tire. I put Avon's on the 906. The key is finding a set of tires that are designed for the Ducati rim width. The front was easy, the rear was more difficult.
The down side to replacing the 16" rims may require a longer swingarm and different forks. The 17" rims will have a larger rotor 320 mm vs. the 16" 280 mm rotors. That'll improve braking, but you'll have to relocate the caliper to compensate for the larger rotor. I think I put a 180/60-16 on the rear, it's a tight fit, on both the tire width and OD. It's a lot more work to increase the rim size and it'll slow the handling down a bit as well.
Let us know what you decide to do and how it works out.