Two things limit insect size:
- Their respiration system which is based on using passive circulation via tubes called Trachae.
- The load bearing capacity of an exoskeleton and the fact that as the exoskeleton cavity gets larger, the internal organs tend to slosh about.
For insects such as ants, item 1 is the limiting factor, placing an upper limit of about 3-4 inches for the truly giant insects. There are but a few examples of such beasts on earth. Unfortunately, since you have mentioned that your atmosphere is blessed with only 3% higher oxygen content, the lower gravity doesn't change anything.
Studies suggest that oxygen levels may have been higher during various past epochs including the carboniferous, maybe as much as 15% higher. However even then, the best nature managed was a massive dragonfly with a 30 inch wingspan. Its actual body would not have been much more than maybe 6 inches long I would guess. Many insects of this period appear to have been unchanged in size from now, for obvious reasons.
Now give the insect some branchiostegal lungs so solve that problem, which technically makes your critter a crustacean, rather than an insect. The largest known land dwelling crustacean (a Coconut Crab) is about 16 inches. However its a slow mover - too fast, or a bad fall and body parts start to slosh about. Lower gravity will help a bit here, but probably not enough to confer a decent evolutionary advantage for very large crustaceans.
My suggestion is to invent an insect/crustacean hybrid that looks like an ant, and increase the oxygen by 20%, and reduce the gravity by one half to two thirds. Maybe also use internal exoskeleton partitions to hold critical organs in place. Then you could get something nasty.