The motor in my 96 has about 380K miles on it and the cylinders look like they were just honed (I know this because I'm in the process of changing the head gasket)
About the gas to diesel conversion... It depends on what you have, my truck was originally a V10 which has the same bellhousing pattern and I converted it to a 12 valve. If you have a 5. 2 or 5. 9 gas then you will need a trans out of a cummins/V10 also. The swap is not that bad, you'll need: complete motor, intercooler, radiator, wiring harness, gauge cluster (or you can just swap out the gas factory gas tach to one out of a diesel, which is what I did), mounts, all accessories, etc. As long as you have everything it's pretty straight forward. The hardest part for me was getting the DMV to make it smog exempt, but I don't think you have to even worry about smog where you're at...