The difference between the LS based motors and the Gen 1 motors is 1/2". The crank "flange" (not really a flange anymore) is 1/2" further away from the transmission mounting surface.
Other differences:
You can run your carb with an LS, just need a ignition controller.
The motor mount bolts are further from the front of the motor on an LS. You can build your own flanges to move the mounts forward, or buy adapter flanges from people like Holley.
The oil pan tends to be the biggest problem - this depends on what the donor vehicle was.
On top of that, many times the power steering pump (in its stock location) interferes with frame rails (if using the 'stock' 5.3 serpentine).
The accessories on your Gen 1 do not bolt up (alternator, a/c pump, ps pump, air pump).
Most times people don't swap to the LS because it simply isn't that great of an improvement over a Gen 1 (yeah, I know, heresy). Your 5.3 LS motor is 300 hp about about the same torque. Your 350 is probably about 300 hp, but 350 or so torque. LS motors are great for pollution controls, turbo charging (because of the design strengths), and a bit of lightness. That said, I drive a 5.3 every day, I've had 6.0 LS, 5.7 LS, and lots of SBCs (gen 1s).... and here's the rub. My 93 Chevrolet pickup got better mileage then my 2002 pickup, even though it was pretty much identically equipped (right down to the gear ratio and the transmission).
If you have a fox body mustang - that 5.3 with a turbo or two and you're a hero. In your FJ40, you'd be so far ahead rebuilding your 350 with a roller cam and EFI.... as sexy as an LS? no, but for a FJ40, it really is the better option.
To sum up, to answer your question, why don't they? because it's not better. Torque wins in the 4x4 world.
i disagree.
To start with the crankshaft flange spacing depends on the engine you use and the trans you use. The LS motors that were designed to go with the later transmissions have a shorter flange. Very easily remedied with a GM part number spacer. The LS motors that were designed to go in front of a TH400 will bolt right up to a Gen II trans. you will need the spacer to go from a 5.3 to a cruiser trans. I believe, but don't know for sure because I like autos, the flywheel from a manual truck should work with your cruiser. Your flywheel might even bolt up, just be sure its not from an externally balanced motor.
buying motor mounts is cheap and easy. I wouldnt make them myself, but they arent that complicated. Buy some with multiple mounting options. I moved the trans forward in my 45 because I didn't have room for the heads. On the pig i kept the trans in the same place because I did have room.
LS is far better than a Gen i or II motor. The gen I motor is a 1950 design. It was great and far ahead of its time, but to think there hasn't been any advancement in engine design since then is silly. The Gen II motor has different valve covers and a one piece rear main. Not a huge difference. Gen III is entirely different. (gen IV got VVT.) The Gen III motor has a different firing order. Its better balanced. It doesn't have the signature 350 lope because that was bad. The balance makes it rev better, last longer and run smoother. The Gen III has better oiling. Much, much better air flow characteristics. Smaller pistons for better power, better heat dissipation and less internal friction. It is buildable to much higher HP numbers while retaining more drivability and reliability. It gets better mileage, anecdotal "evidence" notwithstanding. yeah, who cares about emissions? I like driving my 45 without reeking like fuel all the time. The Gen III is lighter. The difference in a 40 will be noticeable, especially if you use a LS1 5.7. The iron block LM7 5.3 is heavier than the LS1, but still lighter than a CSB. The Gen III cools better. it can be made to have much better power without huge cooling issues. It can run way more timing advance because it monitors and adjusts for detonation.
The CSB is dead. The LS motor is so far superior as to make the CSB a dumb option. You can buy a stock Gen III motor for the same cost as making a free CSB (the only price I would pay for one) make similar power. Which do you think will run better, get better mileage and be more reliable? A stock 21st century motor, or a built antique?
5.3L is a good option because they can be got for a few hundred dollars. The 6.0 is a nice option too. I have 3 sitting in my shop. None cost me more than $500 with PCM and wiring. It has a cable throttle and the correct trans spacing in 99-00. Those years do have iron heads. The iron heads weigh about 90# more than the aluminum, but have the same flow. Aluminum 6.0 head motors are available from 01 up, but will have throttle by wire, (not a bad thing) and will need the trans spacer (not an expensive thing) you can also put the aluminum heads on the early motor with no problem.
stock truck oil pan fits in my 55, but has driveshaft interference problems on the 45. H3 oil pan fits fine. They also call it the hot rod oil pan. It's about $150 with gasket and oil pickup.
the 6.0 runs 325 hp/ 370 torque
the 5.3 stock is 285/ 325, although truck trend dyno tested their stock motor at 363/385 with just headers
the standard 5.7 CSB was built anywhere between 145/200 and 300/ 350. The higher hp versions came in the corvettes and are not nearly as common as the LT-9 (160/250) or L-05 truck motor.
the late Gen II vortec motors were prone to head cracking but made better numbers 255/350 to 330/350, but are no less complicated to install than LS.
run your casting numbers. they are the string of raised numbers on the trans flange behind the left head. if your motor is from the 70s up you should have more numbers stamped on the block just in front of where the right head meets the block, usually behind the alternator. The casting numbers will get you close. The stamped numbers will tell you exactly what you have. If you have a rare high hp motor - sell it to some resto guy. Chances are you'll have some sub 200 horse crap motor. They built a lot of them.