You can never have enough gear.
I disagree with this statement wholeheartedly. I can tell you from experience that you can definitely have too much gear.
There are multiple reasons for this:
First off, there is something to be said for wheelspeed, especially on certain obstacles/terrain. For instance, back when I had my shop, I ran supermod class tube buggies. I can guarantee you there are a lot of obstacles that you just aren't getting over trying to crawl with 5 transfer cases and 7.38 axle gears. Sometimes, wheelspeed and momentum are a must.
Second, there is an inherent strength issue with lower gear sets. As multiplication (the ratio) increases, the head of the pinion gets progressively smaller (with fewer teeth), and/or they try to add teeth to the ring gear, making the teeth smaller. This reduces the amount of area over which the load gets spread. It's a very simple concept to express if you try the following - First, interlock your fingers all the way, and try to spread your hands against one another in "shear" type motion. Now, slide your hands apart so that only the tips of two fingers are touching and try again. See the difference? With axles like the D35 which uses a 7.5" ring gear and no extra pinion support,this becomes even more of an issue thn it is with something ike a D60 or 10.5" 14 Bolt.
Third, the extra torque multiplication generates excessive stress on drivetrain parts. Let's assume for a moment that you are running a motor with 200 ft lbs of torque, a manual transmission with a 5.1 first gear, a transfer case with a 2.72-1 low range, and 3.73 axle gears. Simplifed to it's most crude form (not accounting for parasitic drag in the system, slip torque, shock loading, etc...) your 200 ft. lbs of torque becomes roughly 10,150 ft. lbs of torque at the tires. A stock dana 35 axle shaft is going to fail at around half of that torque, so if you ever wedge a tire, or shock load an axle under heavy throttle, you are going to grenade a shaft. Now if you are running the same setup with dual cases and 5.13 gears your previous 10,150 ft lbs of torque is now up around 38,000 ft lbs. It doesn't take a rocket scientist to realize that this is murder on axleshafts, the input/output shafts on the second t-case, driveline parts, gearsets, etc.
Adding larger tires only intesifies this issue because it increases slip torque, leverage, weight, & shock load on the drivetrain.
Personally, I'd never consider running anything larger than a 31" tire on something like a D35, and I'd never run a gearset lower than 4.10s. I"ve destoyed 4340 chromo 30 spline shafts with 31" tires and a bone stock 4.0L. You look at the break stength figures for the shafts, and you see that it really doesn't take much. (FWIW, really high gearsets like 2.73s and such tend to have the opposite issue - as the pinion head gets larger (assuming no carrier break), the ring gear gets thinner, and in certain instances, can become thin enough to enough to allow the carrier to deflecti under load. In genreal, gearsets in the 3.73 to 4.10 range tend to offer the best compromise for strength in most housing assemblies).
As for the tire stuff, Weezl, you really need to listen to what these guys are saying. If you get out a tape measure and go measure some tires, you will see that what the tire says on the sidewall has very little to do with how tall it acutally is. The advertised O.D. and C.S. numbers help a little, but even then, the height will vary quite a bit depending on rim width, inflation pressure, etc. I've seen off-brand RV stlye "Gound Hog" knockoffs that read 36" on the sidewalls that are only a hair over 33" tall with a tape. You can measure a 33 X 12.50- 15 TSL and a 33 X 12.50 -15 BFG Mud Terrain (both fresh out of the mold), and you wll find that they are NOT anywhere near the same size. It is VERY MUCH POSSIBLE for a tire claiming to be 33" tall and a tire claiming to be 34" tall to be the same height - or even for the 34" tire to measure smaller than the 33" tire.
-Hans