how do I go about slowing down the interrupts so it only reads every 2nd or 3rd pulse from the encoder?
Interrupts are, by definition, high priority events ("If you don't read this character NOW out of my register, it'll be overwritten in a few hundred microseconds"); you don't ever want to delay in them, unless you really know what you're doing.
What you could do is divide the incoming pulses, simply by counting them, and only outputting a pulse every three or four interrupts.
Don't forget to reset the counter.