If Your transmission is stock, You do not have a lock-up torque convertor and there is a lot of slip, when towing. Guages would be a great idea. You might be surprised how hot exhaust and trans. can become.
I have a 25' travel trailer, and when pulling long, steep grades (like in western Colorado), the trans. would get so hot (250deg. +), that it would kick-out 4th gear until it cooled down.
Dodge used to (may still) sell a big trans. cooler that mounts under the bed of the truck (drivers side), that has a cooling fan and a thermostat set at 180 deg. It really helps.
The old, stock transmissions seemed to be really strong but, quite inefficient. I know 2 guys that had over 250,000 miles on the stock trans. and they were both working them hard. I used to service the trans. every year (about 15,000 mi. ). I'm sure these other guys didn't do it that often.
At 150,000, I had ATS, in the Denver area, put a trans. with their Triple-Lok TQ, in my truck. The truck tows MUCH BETTER, now. Doesn't get any where near as hot either. Hardly ever over 180 deg. You now get ALL the power to the rear wheels! Crossing New Mexico, I was playing with a Powerstroke with a horse trailer, and we were doing 85+ for an hour or two. The truck still had more pedal. Don't like driving on the floorboard. The only problem with the ATS trans. is that it is quite expensive. It definately works well but, I think, possibly, You may be better-off putting that money into a newer truck. I'm not knocking ATS, at all. Their trans. was the answer to low-power, lousy towing problems. But, the trans cost me about $6200. 00, plus the trip to Denver and motel bills for 5 days. It's an expensive modification, that works! I don't know if You will get Your money back when You try to sell the truck.
You might want to call DTT (Diesel Transmission Tech. ), in Canada. So far as I know, they don't have a Lock-up TQ for the first gen. trucks but, I have heard their 89 to 91% TQ's work very well. I would, definately, try to drive one of their systems before I bought it, though, to see if it works the way You would like it to work. The reason I mention this is that I had my stock TQ rebuilt, to lower the stall speed, by a high performance TQ shop, in Phoenix and it didn't do anything for the towing. All it did was make the TQ real grabby at idle. You had to really press down hard on the brake pedal, at a stop light, to keep it from wanting to roll forward. That was a $600-700 dollar mistake. However, I have never heard anything bad about DTT. I think their upgrade would be cheaper than what I paid for mine.
I had the power screw, on my injector pump, turned up twice and got a small amount of power increase, each time. Then, I took it to Diesel Performance Center, Inc. , In Phoenix (602-269-5043). He took the pump off the truck and "recalibrated" it. He said it balanced out the flow of fuel to the individual injectors. All I know is that it really woke-up the truck. It, definately, smokes more but, I really got bang-for-my-buck, on that modification. If You are not anywhere near Phoenix, You might want to call them and find out what they did. I'm pretty sure it's nothing "magical" and other company's should be able to do the same thing.
The other thing I did where I got bang-for-my-buck was installing a 16sq. cm. turbo housing. Before, my max. boost was 15 lbs. After the install, I could get over 30 lbs. Another thing, if Your'e going to do similar mods. , get a boost guage that goes over 30 lbs.
I'm not trying to knock the K&N filter but, You might want to take the filter off once in awhile and look inside the plenum between the filter and turbo. Run Your finger inside the plenum and see if You can see any fine dust on Your finger and a clean spot where You ran Your finger. Mine let a lot of dirt through. I sent it back to K&N for a full refund. Again, I'm not trying to flame K&N, just relaying my experience. In their favor though, I will say that my max. boost now, with a stock filter, is down to 25 lbs. They definately move more air.
Well, once again, I've managed to get pretty long-winded. Hope this info. helps. I'm no expert at this stuff but, I thought I'd relay my experiences, to You. Joe F. (Buffalo)