Would you count those alterations as major surgery? Aren't shortening the sleeves and taking in the waist routinely done operations? I have not yet tried Ralph Lauren suits, and with my current success rate with suit jackets, I'm not too hopeful that it will work.
I also looked into their MTM option, although that's based on their Napoli cut. The one I was looking at was the sienna cut. Unfortunately my store does not have the full MTM service.
The suitsupply salesman also said he could "let out the back/shoulders" when I said the smaller size doesn't fit the shoulders. That's not really possible is it?
It is possible, but it is major surgery, and best done by an exceptional tailor. I would want to have a bespoke tailor do something like that, since it is, in a way, remaking the jacket. It is expensive; if they will guarantee the result, meaning if they can't make it work to your satisfaction, you don't pay for the garment, and they aren't going to charge extra (or much extra) then hey, why not give it a shot? Just be really picky and don't sacrifice your standards when it comes back. I wouldn't have shoulders adjusted in a suit I paid full price for; I would do it for a suit I thrifted and really loved, and I KNEW would fit with the alteration. Or, if I had a suit I loved, and added a half inch to my shoulders, by working out our something.
The suggestion of looking at suit supply's custom order option sounds like a logical next step to me, based on what @CruzAzul says. I don't have any experience with SS, but it stands to reason that something made to your measurements will come closer than something that isn't, in the same pattern.