I was running a setup D30/D35 with 3.07s and 35" Toyo MTs. I recently went to HPD30 and Ford 8.8 with 4.88s and couldn't be happier.
I personally wouldn't dump any money into the D35. I was going to do the same thing, and had the HPD30 and Ford 8.8 shipped to my house for 2 grand. Same price it was gonna cost me to re-gear the D30/D35.
Do it right the first time and get a stronger rear axle. You can get the 8.8 shipped to your house for around $1,500 and just bolt it in, if that's the route you want to take.
Question 1: $1,750 for all 5 I guess is a good deal. I paid $1,200 just for the Toyos, and $500 for rims.
Question 2: Get stronger rear axle and go 4.88s. http://eastcoastgearsupply.com/
is where I ordered mine.
Question 3: Keep the TJ.