Keep your engine and tranny and have them rebuilt. You will be doing yourself the biggest disservice if you try and fit a newer engine and tranny into your 96. Don't get me wrong, I'm not saying it can't be done, but for the average joe, I would highly recomend against it. If it were me, I would have your current engine and tranny rebuilt somewhere near your locale. I don't trust these mass remanufactures because they can't keep quality controls consistent. Visit
www.PistonSlap.com and then think about your choice of picking up that 2003 engine/tranny combo. Of course I am speaking from the perspective of someone who is willing to get down and dirty in order to save money.
I would pull the engine and tranny myself and do all the disassembly and re-assembly. The only things I would have done by an outside source would be Machine Shop work like boring and honing the block, giving the heads a valve job, etc. I like knowing exactly what is going into my powertrain. Besides, the only real problem with our drivetrain is the weakness of the reaction gear sunshell in the 4L60-E transmission. Check out
http://www.transmissioncenter.net/ex...duty_parts.htm for pictures.
Of course, I know some people would rather have this kind of work done for them. That's okay, except that you should expect to pay more for it. And you should know who's doing the work. You want to have reciepts for every part that goes into the rebuild. There are a lot of shady places out there, and many ways to get taken advantage of, that's why I prefer to do it myself. Even if you've never tried anything like this before, you would actually end up saving yourself money by buying tools/books and learning how to do it. It's rewarding and you can feel good about keeping your 96 for another 190000miles. Going back to the pistonslap problem mentioned earlier, just check out these forums and listen to how many problems people have with newer GM trucks. I very seldom see many problems with 96 trucks inparticular. It always seems that from 97 on and 95 and before have the most problems. Decide for yourself, but research every avenue completely, or you could end up spending a whole lot more than $2500.......... Feel free to ask me questions, I've rebuilt enough engines I can probably steer you in the right direction.-Chris