If the HG is bad, the cheapest route would be to drop in a used 3.0 if not capable/wanting to do the head work themselves.

A 3.4 swap would be nice, but given how cheap the 3rd gen Runners go for here in CA anyways(often sub $6k), it might not be worth doing to a stock Runner, unless they are going to get into wheeling.

More than tread lightly. Leave it like you were never there, nor anyone else.
'90 X-cab 4.88's 33 BFG AT's, rr ARB, Headers, Ignition upgrade, cold air induction.
'91 X-cab 5.29's 315's BFG MT's, rr ARB, custom bumper and flatbed