I'm sure others know much more than I do, but you might consider filling the sheath with warm water for a few minutes, then emptying it out.
Then take some dowel rod, or even skinny straight branches, whittled to a very long wedge shape. Make two or three of them before wetting the inside of the sheath. GENTLY slide them in, slowly letting them push the moistened sheath wood out. If they get stuck, add more warm water for a few minutes. If they are still stuck, whittle them down more. Let them sit and dry in there. Be very careful NOT to snap them off inside.
In fact, try not to stress any part, but rather "persuade" it to accomodate you.
Try not to let the water saturate the wood fully, although the buffalo skin can always be moisturized again. But you don't want to melt the glue holding the sides together.
As an alternate, find a thin piece of wood, a bit wider and thicker than your khuk. Shave it down to shape, moisten IT fully, and slide it in to the sheath. Let it sit and dry. Then move it out slowly. (Actually, you could moisten the sheath interior with warm water, oil up your khukuri, and use that. It's not going to hurt the blade if you dry it off afterwards.)
Basically, you are making the wood more supple, then reforming it gently.
(One last severe alternative? Take out the khuk, cut the bottom half of the sheath off.)
Good luck.