With the H3, things are so "electronified"...it might actually be easier to swap the body over to a 2500HD Silverado chassis. That would give you the Duramax-D, Allison-T, part-time 2WD case, beefier front IFS, and massive rear axle....all pre-engineered. This sounds pretty cool and way easier than building a drivetrain from scratch (like Bully-Dog did). You would have to chop the 2500 frame and shorten it but, thats not too tough. You could probably score a late-model salvage HD for $10K-$14K.
Also, at one time Trailbreaker and I brainstormed making a complete "stand-alone" wiring harness for the H3. It was basically taking a generic "dumb" harness from Painless Wiring, and modding it to fit the H3. It would back-date the H3 to old-school wiring with all the normal electric functions (windows, lights, wipers, etc.). It would have a REAL fuse box with extra accessory ports, (blunts?...really?) a starter circuit, etc. just like all cars used to have...but the drivetrain would be completely separate, and not part of the main harness. This would allow you to run whatever engine management box you needed for your particular motor...without having it tied to the rest of the truck. You could run a carburated small-block, maybe an 80s TPI small-block, whatever you wanted....without dealing with the stock computer. You could also run whatever tranny/t-case combo you wanted to...like maybe a TH-400 with an Atlas? Naturally...this means running a "shell" of a vehicle, and creature comforts would have to go. I'm picturing something more like a NASCAR interior...push-button start...roll cage...headers...AutoMeter guages...etc., so it probably wouldn't appeal to most folks.
Trailbreaker was working with a Delco electrical guy on this when he sold his T, and I assume he lost interest, and scrapped the project.