In reply to:
I was thinking of getting the spring rearched and mabey adding a couple of leafs. Tell me what you think.
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I don't think you'll like it if you're wanting to get some good flex from it.
Tuff country makes some 4" EZ ride front springs that flex good, and it's what a lot of K5 owners use. Custom springs can be made better, but the TC have good flex for a good price. There is also the option of putting the rear springs up front, and removing a couple of leafs... that's good for 4" and great flex, maybe even a little too much if it's a daily driver. Then replace the rear springs you used up front with 56" rears from a truck.. add in a shackle flip. There are a few options options to go with. 4" w/ 36 will be fine... I was wanting to run 38.5's with 6", but unless the springs are custom, it's hard to get 6" springs to flex the way I want.. so, I may be using the TC 4" springs up front, and a flip in the rear. Maybe even a 3" flip with some 56" 3" springs.. as you can see, it can get very involved.
The plain ol out of the box lift kit, even for a SFA GM, is not what it's cracked up to be for wheeling. To be honest, if you really want to wheel the thing, I would honestly have to suggest a forum that deals with your type of vehicle, and that has lots of experience with making it ready for just that. Ck5 is a good place, pirate, even austink5.net, although there are not nearly as many members there, has some people who's brains you could pick. The flex you can achieve from good springs will really help for you're climbing etc, and won'y hinder you mud fun. If you were just going to stick to mud, then flex would not be as much of an issue. Whatever you do, if you plan to climb, remember that you want to keep your center of gravity low... there is a reason you don't see rock crawlers running 12" lifts w/ 44's.... let the mall cruisers do that, and stay away from that BS. Be prepared to trim some fenders if you plan to get some flex, since having a low center, and big tires will require you to.
As for the 600 dollar thing... that's not unreasonable for say just a suspension, but if you plan to wheel it medium to hard like you say, then you're going to be in for more than that.. lots of parts can get broken when you play in the rocks etc.. especially with big tires. beefed up axles, axle armor, stronger D shafts, traction aids, long travel shocks, stronger yokes, anything from crossover steering to that along with high steer tie rods.. and the arms to make it so.. it's all connected. I still have not mentioned tires & wheels... it can be a money pit, but if you love doing it, it's fine, and you'll spend a lot less doing it right the first time...
However, you won't find much help at this site alone... so if you plan to go that route, plan on visiting some different forums. This was the first off road forum I ever joined, so I still like to hang around here from time to time... but it's nothing like it used to be.
Have fun, and good luck with the Blazer!