I want to stick with 285/75r16.

 

4.10s seem to be the common suggestion for those tires. Would require a carrier change in front either.

If you want a traction adding device up front, best to go with a selectable locker. Only locks when you tell it to.

 

Should I upgrade my suspension before I drop in the new engine?

 

I would upgrade the trans before I worried about the suspension. The trannys in these trucks were weak, at best, from the factory, and the 360's had no trouble doing them in. A 408 is going to be able to make VERY short work of it.