The 8.8 is a pretty strong axle, even in its stock form. I run 32s with 3.55 axle ratio and don't have a problem. A friend ran 33s with his 302 and (I think 3.55 axles) and it was a bit sluggish in the hills, but he liked the big tires.
I would first lift it, second go to 33s and third change the axle ratio. You may find its OK after driving it with 33s and 3.55 axles. It will be abit slower but may be fine. As far as the rest of the drivetrain, just keep it lubed.
I'd save the money for the R&P upgrade and try it before spending it. you may find you have a few hundred to spend on something else.
99 4Runner (wifes grocery getter)
88 Bronco * FOR SALE *