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Yes, keeping the diesel. I'll probably just wake it up a little with intake and exhaust upgrades, but probably no turbo.Overdrive is in the cards as well at some point.
IMO intake and exhaust is the way to go on these engines. You can get about 90% there without the stress on the engine. If it hasn't already been done recently, change out the harmonic balancer. I've seen too many instances of broken cranks that might have been prevented had the harmonic balancer been changed out. For overdrive, either a 87 and newer 700R4 will do or a NV4500 manual. If you're going to be doing lots of towing, the 700R4 might be a little weak for this.
Ed, who's exhaust do you recommend? As in from the heads to the rear?