OK, so here are my new plans for the engine and transmission.
I decided against the 700R4. Instead, I will do the 5.3L/4L60E swap. How cool is 325HP at 20-22 MPG?!
My old 2003 Chevy 2wd ECSB with a 5.3L/4L60E/3.73 got 19-21 MPG on the highway, that's mostly the kind of driving I do. Even when I had the Whipple supercharger on it, I still got 19 MPG! I imagine Fred is lighter then the 03 ECSB was.
So, I adjusted my budget for the rest of this year. Next month I will buy an engine. September I will get a transmission, and for the rest of the year I will gather the rest of what I need. I can build my own motor mounts, those are easy, and do any mods that need done to the trans crossmember and frame (if needed). This will then be my winter project for the truck.
I have been talking to the local LKQ rep, they have several 45,000-55,000 mile engines in the $550-$650 range. Still working on them as to what accessories I can wring out of them as part of a deal. I already have shorty headers that were on my 03, and an ECM from an 06 which had drive-by-wire, plus a new MAF.
This winter is gonna be fun! Then I won't have to worry about that pesky surge I have!