Joel, you can use the ball joint spacer with or without a lift(body or suspension) I am also planning to do this mod in the near future. Here is a link to the thread over on the 4-wheeling forum. Linky
That should answer all of your questions.

4x, I would like to know how the shackle setup is going to work for ya. IIRC the stock Tacoma shackles are about a inch shorter than the stock T100 ones. Please keep us updated, (can ya tell I am very interested <img src="/forums/images/graemlins/coolg.gif" alt="" />)

Ryan,