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While I agree that a 700R4 would support a 6.2 diesel just fine... it would require a complete changeup of the entire drivetrain. If he can find a donor vehicle with Transfer case, adapter, T-case, and front/rear drivelines... then it makes sense for the right price. Swapping to a 4l80 from a TH400 would require just the 4wd 4l80 and adapter. No change to the T-case or drivelines required. You would need a way to control it and some modification to the shifter assembly, but it has been done many times and is pretty well documented how to do it.
I imagine it’s a case of six on one hand, half a dozen in the other, in terms of comparative costs. 700r4 is a driveline modification, yoke swap no pcm required.
Its an 85, so it will be a round pattern short output TH400 whether it is an NP208 or an NP205(which were the only two options in 1985). All T-cases that were behind a TH400 after '84 will be round pattern with a long 32 spline input. It is a direct swap for any 4wd 4L80 from a chevy truck/burb as long as you use the T-case adapter from the 4L80. There should be no driveline mod, yoke swap, shift shaft swap required. The existing 400 rod connector will swap right over and you will need to extend the linkage and linkage pivot point by 1" to the rear. That's it for the entire swap. If you can get the 4l80 from a driving vehicle, I'd be tempted to not even open it or do anything to it, just drop it in and go. A 700R4 will need to come apart and get a full work through and some upgraded parts/cooler before I would trust it to leave my driveway.
You’d be surprised how many running 4L80s need something or where something is just about done internally. Worn pumps (priming crescents excessive wear causing line pressure irregularities), forward drum sealing ring groove wear, direct clutch pack on its way out, etc.
