Don't worry about what sort of gear they are, at the end of the day teeth meshing is teeth meshing.
i.e., if a driven gear with
x teeth makes one full revolution in
y degrees of rotation of the drive gear, than a driven gear with
2x teeth will make one full revolution in
2y degrees of rotation of the drive gear.
So, if your speedo reads high by 20%, that means your transmission speedo output cog is turning at 120% of the desired speed, so you want to reduce its rotation to 100/120 (simplified to 5/6) of what it is now, which means you need to add 1/6 more teeth.
The current gear is 19-tooth, 1/6 of that is 3.17, which we can round to 3, so your new gear should ideally be 19+3 = 22 teeth.
So you would want to swap from the red 19-tooth gear to the green 22-tooth gear (Volvo part no. 381658)
To answer your other question, yes it is that simple 🎉 Ideally replace the oil seal and o-ring at the same time.