I'm courious, whats wrong with the frame? No matter which way you go, S-10, subframe, Must II, your going to have plenty of work and none of it easy. I know that resto parts are geared for 1/2 tons, so maybe thats why your thinking this way? Hang in there, some stovebolter will come along that has been there done that.
The current frame looks like someone took, no I am certain someone took a torch and blew holes in the side of the frame every 6 inches for the custom bed they made for it. Since I am not keeping the bed he made that also means I'm not keeping the bed supports he made which leaves the frame with about 20 or so 1 inch holes that were not properly painted or anything and are currently covered in surface rust. Weather or not that will cause a problem for the truck frame I am not sure, what I do know is that it will irritate me every time I think about it even if I can not see them.
As far as what I want to do with the truck, I want to replace the engine, Looking at several options a 292, the 4.2L out of a trailblazer, or I was possibly thinking of trying to find an older Inline 6 Diesel I can use. I am not able to find much info on my truck. I know it either had the 248 or the 228 in it but I would much prefer a diesel engine. As far as the transmission, Id like to upgrade to an automatic maybe an Allison 1000, or a 700R4, as I have a bumb leg and cant drive a stick. all of the body work, I am hoping to keep original, no lifts, or lowering here, just want to re-power the truck with something a little more modern, and a little more environmentally friendly so that the wonderful state of CA will leave me alone!