Sounds like you need to do some research for what will work with how much "work" you are willing to put into it and how much power/torque you want your son to have.
Wikipedia is a great source to find out the differences in engines, what years the production runs for certain displacements were, and general bore and stroke for each class.
Advanced Adapters is a good web site to see if there is adapters to mate newer engine blocks to older transmissions, or newer engine's/transmissions to older transfer cases.
If you plan on keeping it a 4wd truck, you can not use a 2wd transmission and hook up a transfer case
unless you use a divorced transfer case. In my opinion for what you are doing for your son, this would be extreme and not worth the money. But hey, it's not my money or time, so you need to decide.
To answer your question directly,
NO, a 2wd drive transmission is not the same as a 4wd transmission. Almost all 2wd transmission can not be converted to accept a transfer case. That is why they made 4wd transmissions.
If you do have the 700R4 auto transmission and the 205 transfer case, the 700R4 can be beefed up to handle all kinds of HP and TQ. The 205 is a well built, hard to destroy transfer case. You can get adapters to mate newer engines to the 700R4 since these are popular transmission swaps, so the aftermarket supports these swaps a lot.