What rubs and not rubs and "fits" depends also on rim size and backspacing ...and tire width
Something over 4" suspension lift should do it. Possible rubbing will occur at flex. You can lift it higher or trim the fenders.
7 to 8 mpg is kinda low for J-10 360 w/QT
Could be valid reason your mpg is poor....
Actual mpg depends on driving style, axle gears, condition of vehicle, engine tune, tires, tire pressure, tire size, etc.
15+ mpg is possible for good condition with mild tire size (31" or 33")
adding 35" tires will reduce fuel economy much
You can add locking hubs to the front but you will need to keep the center differential locked (E-drive engaged) when the front hubs are unlocked. You can also convert the QT transfercase to part time with a kit.
Also check out the IFSJA
site for tons-o-good info for your J-10