ok, now were getting somewhere. I stand by my original suggestion of the vortec heads and intake. biggest bang for the buck you can do to that 350 (as well as a general rebuild to freshen it up)
but if youre also looking at putting bigger tires on it, then gearing is gonna be manditory. larger tires with the gear you currently have will make it feel even more like a slug than it already does.
Personally, ive been running stock ride height (actually a little less due to saggy springs) and 33in tires, and have been able to handle water crossings up to the crease in my body panels, 2 feet of snow, mud, and trails without issue. Pretty much the only thing that has laughed at me were mild rocky courses that i didnt have the clearance or gearing to tackle. but i do have to admit, these trucks really dont look right with less than a 4in lift and 35's IMHO.
but be forwarned, if youre looking at tires, lift, gears, and engine mods, its not quite budget anymore.
Id do it in stages. for the time being, focus on the engine. you can score the vortecs at the junkyard for cheap. just factory iron heads to the yard. get a manifold off craigslist or ebay or something. and bolt up your current setup. that engine should have pretty dished pistons so your compression should be ok. but its always safer to check. the chambers on your current heads are also probably much larger than the vortecs. the compression will go up, but it shouldnt be to a dangerous level.
do the lift and tires as you find you NEED them, or can afford them as a "want" item. and do the gears in reaction to what size tires you put on.