I can address the "size" question. I wear a size 14 shoe. 'Nuff said.
In all seriousness, a short TB is still a 4 door which makes it easier for my daughter/friends/ridealongs to get in/out of. The cargo area is smaller, unless you have a 35" spare in the cargo area of your K5 (mine is), then it's negligible. Cargo area is not a huge concern, between the existing cargo area and a roof rack mounted basket, I can carry everything I need for a road/camping trip. This is based on the spare being bumper mounted, not inside.
Now let's address the other questions....
Carpet the K5. I don't see a point in putting a carpet/insulation in a truck that I routinely remove the top and leave it off for months. And it's not just carpeting/insulation. Wind noise, rattles, water leaks, exhaust fumes rolling in the back window and NO A/C. I could spend untold amounts of money to fix those issues, literally thousands. Or, start with a body that has a complete interior as well as todays sound deadening qualities and build quality PLUS a working A/C unit right from the get-go.
A weaker build? I really don't think so. TB has a body on boxed frame construction. I'm no engineer but, I'm willing to bet that construction is stronger than a K5's C channel frame and flimsy body tub, maybe even stronger than a 3/4 Burb/truck of the same vintage. Roll cages and frame boxing can fix all that. But again, more money out of pocket to update a rusty dented body tub. Not to mention, time. Lots and lots of time.
Power/economy. I haven't searched but I bet the numbers from the TB I6 are similar to or better than a stock TBI (which I have). I won't debate the tired/old part of the equation here as most TBs I see around the $3k mark have 125-175k miles. Both could benefit from a refresh or LS swap, but that's not the topic here. As far as economy goes, the I6 has a much better, more efficient, more reliable fuel inj system. On top of that it's much more common and easier to find parts for (there are literally zero square bodies in junkyards around here, even the 90s TBI trucks are getting hard to find). The old TBI system is outdated and finicky and the parts are getting older. Will the TB I6 provide any better mileage than a TBI 350? Probably not, but at least it has a fighting chance.
I've thought about building an IFS 2 door Blazer/Tahoe. But you can't touch a clean one of those around here for under $5k. Then I'm still left with a 2 door (not the end of the world) and an old TBI. A 4 door Tahoe or any Burb (square or newer) is not an option, New England trails is all I really need to say there. Which brings up another plus to the TB and it's slightly narrower body size.