700r4 in a 68 3/4 with 35's

[jetboat]

I know there are a ton of 700r4 threads but I didnt want to hijack anyones...
I just picked up a 68 3/4ton 4x4 with a mid 80's 350 (feels a little weak might need a rebuild) with a 4 speed manual. At 60 the thing is screaming and I plan to make this my Toy hauler so 40 mile trips down the interstate are a must. Will a 700r4 (rebuilt with new torque converter and rebuilt t-case) Be a good choice or will the 35" tires be too much for it. As for offroad use, it will be very limited to getting back in the woods for firewood etc...no real trails. It will prolly see time towing a trailer, most of the time below 3,000# but a few times a yr 4-5k#. (Plan to upgarde to a diesel at some point but will be a while)