All very true and valid points Hans.
You mentioned you would never run more than a 31's on the D35, maybe b/c of your driving style or something else.
My point is that many people have had good luck with the TTB D35 and up to 35's....so what would you go with if you were in my situation? 4.56's, 4.88's, or 5.13's considering that I will be on 35's in 2 years or less and no DD it anymore.
I only want to spend money on gearing for this D35 and Ford 8.8 (an explorer one mind you

) ONCE. With minimal regrets and optimum offroad capabilities.
I can live with un-ideal circumstances that this gearing will cause while I DD for a while until I get another car and this is no longer my main mode of transport.
I am not a lead foot offroader either. I believe in proper line choice coupled with proper throttle application to get you to your destination without breakage.
I look at it this way. If I have been able to live with 3.73s for 6 months commuting 60 miles per day, I should be able to cope with over gearing in the same manner that I dealt with under gearing.
I am admittedly hard on stuff. I say I'd only run 31s because thats what I've found to be the best compromise of reliabiliy and off road performance for the type of wheeling I use my BII for. When you get used to running lightweight tube buggies with stuff like 1.5" diameter 4340 axleshafts, 9 3/4" ring gears, kingpins, and 1480 series steering u-joints made out of 300M alloy, you grow accustomed to being able to beat the snot out of things and be fairly confident that they will hold together. This is not the case with something like a D35 front TTB assembly - if you get aggressive, stuff goes boom.
We do a lot of long trips in very remote areas with these trucks. We may run 90 miles one way through the woods and only cross over 4 or 5 paved roads in the process. If you break an axle out there, you either have to stop and fix it (which means carrying spares, the necessary tools, etc...) or you are going to have a very difficult time getting the truck out of the woods to anywhere with civilization.
Sure, I could run bigger tires, and idle and winch the truck over everything at 1/2 a mile an hour and probably not break stuff, or run the front axle open or with a truetrac instead of a detroit - but none of those options really work for me. My BII is built for what I'd call "spirited woods bashing" (technical term, I know). The D35 axle (and the D44 for that matter) just doesn't hold up to big tires with lockers and that kind of use. It uses tiny wheel bearings that are an inch apart, 297X u-joints, a 7.5" ring gear, and 27 spline axle shafts. Personally, I'd rather be able to bash the truck and have it hold together (most of the time anyway) than run larger tires and have it break (especially considering that most of the time when you break a front shaft under load, the backlash rips the teeth off of the side gears in the detroit, and you have to pull the whole carrier out and rebuild it) - but again, that's personal preference.
Anyway, as for your gearing choice, The best advice I can give you is to do the following - calculate the mathematical RPM difference you will see on the highway with the 4.88 gear set and your current tires, and figure out what you would be running. Once you have the percentages figured out, spend a week alternating between running the truck at the RPMs you would need to run to attain your current highway speed with the new gears, and the slower speed you would need to drive to run the deep gears and keep the engine at the lower RPM... then see how much either of the two bother you, and use that to make your decision.
Personally, I run 4.10s and a 5 speed in my BII (2.9L) and it drives me nuts running the truck on the highway because I either have to turn the motor faster than would be ideal to keep up with traffic, or putt along and take forever to get anywhere. But, as stated, the manual transmissions that came stock in these RBVs have very high 1st gear ratios, so you need to run more gear to keep from beating up on the clutch. I'm hoping that swapping in a 4.0L flywheel and clutch assembly will help some of that (since it is heavier and carries more inertia), but I'll have to see how much that helps things when the truck ends up needing a clutch put in. The autos tend to have less of an issue with this, since the torque converter in essence multiplies the 1st gear ratio.
I'm in full agreement that if you plan to run 35s, having the extra gear will undoubtedly be nice - especially driving around town in high range. It will also work better off road (provided you can keep it together). If you can deal with the higher engine RPMS or lower highway speeds in the meantime, and go easy on the truck off road, I would say the 4.88s are proably the way to go. However, if a year from now you find that you are breaking stuff with your 35s and want to go back down to 33s, you are going to once again be forced to deal with the extra RPMS/reduced highway speed.
Ultimately, you are going to have to decide what is in your best interest for your particular situation. If yor plan is to start trailering the truck places in the future, go ahead and run as much gear as you need... just don't be surprised if you start having issues breaking stuff if you run more aggressive trails or use the truck hard.
I know that's probably not much help, but it's really going to be dependent on how the truck gets used, your personal prefernces, and our driving style.
-Hans