agree with all the above. Gearing like the 3/4T that engine would have come in (probably) will work well in the K5 even though it's a fairly light truck because of the deeper overdrive gear of the 4L65 and the fact that a K5 on 33s at highway speed (60+) is borderline a tow/haul load to start with. If you're not going to be on the freeway much, the 4.10s are still nice because it'll let him use all 4 gears more often than a lower numeric diff ratio.
My parents ordered a '05 Yukon (short one) with the 5.3L and 4.10s and the combo always felt right. We did run 33s on it (295/75-16) and it worked well all around and always turned in 15-ish mpg. I wouldn't expect that milage with the K5 but it'll be about as good as you can make it.
The extra displacement and engine work will make it a lot of fun I bet. That's going to have a torque curve and overall output that I could only dream about from my built 383 with 1990 technology in my '82 K5. It was good for the time and got me through the end of high school, college and a couple years of life after that but I'd rather have had what he'll have.