leave the truck as it is, take $1,000-$1,500 out of savings and buy a decent mid 90's 4 banger car (i know, i know, but hear me out). it'll get 35MPG, which considering your 12MPG and...lets say $3.40 a gallon (supposed to be higher by the end of summer)....the car will pay for itself in just under 8,000 miles. the higher gas prices go, the faster it'll pay for itself.
things ive learned from owning a beater front-wheel drive car:
they are cheaper than dirt to own. i put a set of 4 tires on my escort for under $200.
maintainence is zilch compared to a truck (there are half as many seals to leak, for example). and the FWD platform is so SIMPLE.
they are tough. again, having everything all in one unit means theres just not much to go wrong.
they are (dare i say) fun to drive...especially if you get a 5 speed.
this will let you leave your truck jacked up for the "cool" factor. plus when it comes time to do a v-8 swap, you will have something else to drive, A: while the truck is down for the actual swap and B: after the swap when your 12MPG goes down to 8