If you rebuild it and don't race stoplight to stoplight, it will be fine. The TH350 can't take the hit from the high torque over and over. Towing a trailer it will be fine, since you don't stomp on the gas. It will handle the load, just not the spike in torque from racing. A Muncie would be a good trans as well, they handle high torque very well. What was the HP rating when you had it dynoed? Seems very high torque at low RPM, kinda like a Diesel or maybe a stroker. I wouldn't sell the truck. Just rebuild it, take it easy and have a 400 built so it is ready to go in. You will be able to sell a rebuilt 350 for some money to help make up the difference.
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