Yes, from a purely cosmetic standpoint i lean towards #1, from a "probably the best" standpoint i lean towards #2. My only problem with #2 is the re-gearing, that is not something i can do and finding a set of gears could be expensive.
Tire size does not play into my current calculations as my odometer still does not work so i will be calculating mpg based on a miles between set points using google.(figure distance between gas station and a set point and back and fill up at both ends to discover fuel used)
I currently run 5.29 gears, if i went to 33"s i would probably try to find some 4.88s. Not 100% sure on that though.
As i said above i kinda lean to #2 as well as the ideal, but #1 may be less hassle. It may come down to figuring which will be more expensive and then figuring how much that extra investment will save me. I know i'm not going to get amazing mileage, if i wanted that i wouldn't have bought a truck(well, at least not a lifted one). And well dangit i kinda like having a big truck, i just need to find the balance.

Mean time, while i decide, can y'all help me come up with a list of what i will need to lower the truck, whether that be 2 inches or all the way.
I know i will need:
Springs
Shocks
U-bolts
Knuckles
Tie Rods
Ball Joints
Idler Arms
.... you get the idea, i have no clue what i'm up too
Whichever height i end up going for i want to do it right, replace anything i need to and beef anything i ought.

EDIT: Updating the list with suggestions from following posts so i have the list in one place for reference.

 

For reference here is how it sits right now:

 

Shocks knuckles springs. Unless your A arms are damaged you will not net new ones. Might as well look at new tie rods ball joints idler arms.... etc

 

Thanks. Updating the list in my post.
Btw, its that etc that gets me, i have never messed with suspension etc does not suggest anything to me. So if you wouldn't mind expanding your list i would be grateful.

 

Look up a 4 inch lift kit from a reputable company. Look at all the parts involved and realize that is what you are replacing. You now want the stock replacements for those parts.
As far as a front end goes look up a front end kit from Moog or other company and see what is all involved. I'm not saying that your front end is trashed or anything. I was merely suggesting that you will be messing with those parts anyway, so it would be a good time to replace it since you are already there. 4 wheel drive Toyota owner magazine just did a big how to article on replacing the front end our trucks. It was very informative

 

Good idea, i will do that.
I completely agree that now would be the time to replace those parts.
I will have a look for that article.

 

I think what i'm going to do is a combination of one and two. I will drop it to 2" then see how much trimming would be required and at that point decide if it will be 33"s or 35"s.
Can anyone recommend a good front end lift kit and a good quality leaf spring brand or rear lift kit.
I am normally in favor of buying individual parts to be picky but speed is of the essence now so i want to buy kits.

 

got a friend close that wants a lift kit and has the same truck??? could do a swap, stock for lift....

I think most 2 inch lifts are going to be ball joint spacers versus a knuckle lift. if that is true you will still have switch the knuckle. you will have to do some research.

 

Ah... i did not realize there was a difference. That might complicate things.

 

Okay here is a picture of a basic lift kit similar to what i assume must be on my truck, 4" front 3.5" back.

I see and can name:
Shocks.
U-bolts
Blocks
Brake drop-down plate

Then i recognize those big brackets in the middle(they sit below the dif correct? and do the actual lifting on the front, right?)

The other stuff i have no real clue. In the morning i will take some pics of what is currently on my truck and play some matching.

 

The triangular pieces at the top are your knuckles. Yes the big brackets in the middle are for the diff.

 

Okay. So i need to find a stock set of those? I assume that would be as simple as finding a rebuild set.

 

Had an idea. I'm searching cl for a parts truck that i could pull the stock suspension off of. Would have the advantage that i would know where each piece came from.

 

Or.... i could cheat and trade it for a stock height truck in a little better shape... that could save time and money. Then i could put that money in other mods rather than suspension.... I hate cl =p

 

Score, maybe.(i doubt it but hey, a chance is a chance)
http://greenville.craigslist.org/ctd/3898850874.html
I did a spur of the moment txt and ask if he would trade, and he is asking questions and considering... Shoot yes!
94, 4x4, 22RE, 5spd

Told him he could keep his sound system and his pristine bench and he likes the look of my truck. Win win, he wants a lifted truck, i want a stock one.

 

looks good!! best of luck

 

Yeah... i kinda feel bad for quitting on this one but i think this way i would come out ahead.

What else should i ask. I know its a 22re, 5spd. Extra-cab, DLX.

 

is the title clean?? and when can you pick it up??

 

Yeah, can't forget those. He talks like he wants it but is hesitating, so we shall see. Unfortunately it would be Monday at the earliest before i could meet him as i am out of town so he will have plenty of time to hem and haw.
I was thinking given the condition of his i would price out a few of the smaller fixes i never got around to and add some cash to the trade, but only if he says no to an as-is trade.

 

I actually think he is going to bite. He has been asking questions all weekend and is trying to arrange to meet me Wednesday so we can see and test drive each others vehicles. So far i haven't had to add money.
I like everything i am hearing about his, but those rims will definitely have to go ASAP.