Yes, the problem with that motor is the power to weight ratio. that is a heavy motor that came in that truck and the power output was not that much more than the TBI 350s the following year. If I were you, and I am going to assume you have fab skills, and I had those two vehicles, this is what I would do.
Shackle reversal on the front, you will have to outboard the hangers, add about 1" to the wheel base. I would use a stock YJ front leaf pack with a couple springs from an S-10 mixed in.
Rear I would use XJ rears, flipped (adds about 6" of wheel base), fab up a new rear cross member or use the BTF kit.
Sell motor and Transmission
Buy a Chevy TPI 5.7 or 5.3, both weigh considerably less than the 454, more power, comprable torque.
Transmission, my choices would be
trail only- TH350
Daily Driver- 700R4
I would probably run the 205 and do a 203/205 doubler. the gearing in the 205 is not as deep as the D300, but way stronger. plus for what the doubler cost, it is not much more than is you bought the adapter to convert a chevy trans to a D300.
Axle Gearing
Trail Only or daily driver with just a 205 -5:38
Daily driver with a doubler -4.88
I would run a 40-42" tire with this set up. also inspect the front axle, the stock knuckles are prone to being weak simply due to age and corrosion, also, the front shafts, if they are neck down shafts, you should think about replacing them with either stock non-neck down or chromo. also, D70 outer stub shafts use the same dimentions as the D60 stubs, but upgrades to 35 spline outers, nice upgrade if you can find spicer 35 spline lock outs (35 spline drive flanges if trail only, can be bought all over the web)
