I am going to try 37's on d44, though they may not fit with my current lift, and I may not like rpm range. For your gear choice if you stay with the th350 4.88 would be good, if you go to a .7 over drive trans(700r4/4l60) you might want to go 5.13 or 5.38.
The 406 has a longer stroke than 6.0, wouldn't even consider the 5.3 for a heavy k5+ wheeling. I'd stick with 406 and the roller cam update. Or a 454