I am currently running 4.56's in both of my rigs. My crawler has the 39.5 boggers and a built D60 up front and 14B out back with an SM420 (7.05:1 first) to a 2.28 toybox to an early 3 speed cruiser case (2.31:1) giving me 169.32:1 crawl ratio. But it is an absolute dog in high range and struggles to get up to speed in 4th.
My Fiona (light duty crawler / street legal rig) is on 38.5 Bias TSL with stock H42 4 speed (3.55:1), stock split case transfer case (2.28:1) and once you get moving it does just kinda ok, in the rocks it isn't nearly low enough and would greatly benefit from a lower first gear and some lower axles gears. That truck being a street truck still I would probably run a 4.88 and a different trans to better suit my needs.
your truck plans being on similar sized tires I suggest going to the 4.88. That will enable you to maintain enough wheel speed that is needed in the mud but gearing low enough to easily cruise around town and you will still have a little bit of rubber overdrive (spedo will read slower than what you are actually moving due to larger tires.) enabling you to keep the RPM at a tolerable and more fuel efficient level.
As some have said it is technically not legal to put an engine that is older than the vehicle it is going into in it. The engine must be the same year or newer than the vehicle it will go into. Now that said depending on location of you and the could be purchaser this could be a major deal breaker and could take the vehicle off the market instantly to a large number of people. On the other hand, the buyer just may not know or care and therefore it wouldnt matter to either party. Just something to consider.
On the 327... A lot of people I see are bashing it, and it does have some flaws for sure depending on the year of the heads and what not, among other things, but it is still a good motor. Yes you will loose a little torque down low over a 350, but you will be pretty even to the I6 (at about 800 RPM) and you will have much more as the RPM's come up. So I think you will be happy. I think in the long run you would be much happier with a nice powerful and light 5.3, or LQ4 or LQ9 6.0. But it is your truck and you can do as you please.
I am going to be doing a 350 swap into my crawler in the next year or so depending on how business stays. Only real reason for me to switch... A buddy of mine with a YJ is dropping an LT1 into it and being that I have the smaller tires, heavier rig, and still on leafs all around (only one of the group I wheel with and I have the smallest tires and biggest rig...) I am playing "keeping up with the Jones'". It does help that I already have my 350 that has been rebuilt a few years ago and has been in my garage wrapped in plastic awaiting its time to be used. I will be running 96-99 chevy vortec heads to help a little with power as well as an edelbrock air gap intake with a decent duration cam (it will kill my bottom end but I have enough gearing it wont matter to much) supporting valve train and some longer rockers and to make sure to bump it into the 400+hp range I will be using my nitrous I pulled off of another car I sold a while back and keeping my propane.
