Having both these engines I can say that the 4.0L is quite different than the 3.0L. My take is the 3.0L has adequate pep for street driving and has no problem going up hills etc if not fully loaded. But as has been said at lower rpm not lots of power. It gets better mileage, such as it is, than the 4.0L, I think - haven't driven the 4.0L that much yet.
4.0L (comparably speaking) has massive torque which you notice right away even at low rpm, if you aren't on the gas it's already in 2nd or probably 3rd by like 30mph so that makes me wonder you might have to change your shift points if you have auto trans.
But if you're on the gas it will get you fast in not very long and will rev out properly before it shifts.
To me if I had to make the decision it would be a no-brainer I would go 4.0L. I don't see they are any harder to work on but here's the thing, I think the 4.0L changed in '98 and I think the older 4.0L is better but well may not fit your truck.
I can't speak to the later 4.0L, I know they spec more power than previous gen, but not a lot different.
Don't know if the smaller turbo engines would fit, don't know anything about them except I know a 2.0L can make 225HP stock because I had one (Saab). I guess now the newer trucks have the smaller engines but that's nothing new they were around 25 years ago. Probably nothing would fit.
There's also possibility of 5.0L, I know it would fit my 99 but wouldn't fit the 97 so not sure on your 98, probably would fit? Guys here will know. Except it would require beefing up trans and replacing axle... so... much more mods required, probably not an option you want.
Basically my 3.0L is just fine and not underpowered for regular driving, but when I get in the 4.0L the change makes me think "I'm driving the beast now". I think the power range is like 2400-3200 so you really feel the torque come on quickly. I have no true 4x4 experience yet but I went up a really steep forest road effortlessly in 4x4 it was like nothing you can feel reserve power there.
You wouldn't think, looking at the specs, there's that much difference in them but there is. Probably the torque/hp curves tell the story.
That's my 2 cents, others will know better about what fits and the tech details of it. I just can't see any reason to not go 4.0L unless there's some fitment problem.