.....Need burnout video 
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I'm getting idle are control codes for the rpm not being where the computer expects it to be. Could this be caused by deceleration since the vss isn't hooked up?
What are thoughts on tapping the end of the transfer case idler shaft for a bolt to hold a reluctor ring gear on the the shaft for my VSS? the heep guys do something similar with a SYE kit.
...On mine, were using an in-line VSS...
correct me if im wrong, but it doesnt sound like "we" are doing anything, it sounds more like a "they"
The shop that is wrapping up my 5.7 swap just finished a 5.3 swap into an FJ40 and machined the tail housing/shaft for a VSS. They epoxied the sender into the housing. It looks real good.
If you want, I can ask them for some pics and a more detailed explanation. On mine, were using an in-line VSS since I'm running the stock 4 speed and mech speedo.
The vss is defiantly going to throw off your mileage. That's part of what tells the computer to lean it out at certain speeds reducing fuel consumption at highway speeds. That 4 speed is also most likely a horrible match for what the ecm has mapped out as far as speed, fuel mixture, and rpms so if your going to keep running it for an extended period of time I would have someone reprogram it to match your rpms.
Honestly I would think if you had the vss and your ecm tuned for that transmission it would be much improved.
I get 17mpg on 35s and 8 inches of lift with a tbi/4l60e at 70-75 so I'm willing to bet with your setup you could do at least that and probably 19mpg with some type of overdrive trans.
I want to know where the Phish sticker is!