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I was wondering if there are any performance products on the market for my '87 F250XLT Lariat, 6.9L 4spd 4wd extended cab? Most everything I have seen starts with '94. I'm not even sure what kind of axles are under it, although I've been told on here before that it has 4.10 gears.
Also, how difficult would it be to mate a slightly later model 5 speed transmission to my current engine to help improve mileage?
It depends on how much you are willing to spend (the age old saying). Swapping a 5 speed will make a good inprovement in mpg, but the payoff time will depend on how much fuel you are burning right now. Good deals come up every now and then, if your're not in a hurry, you may be suprised at how little transmissions can be had for.
For power performance, the only sagnificant upgrade will be a turbocharger and high flow exhaust to match, again, they are expencive but can be found second hand sometimes.
Any good exhaust shop can make you a bigger exhaust, that will increase performance.
If you are handy with tools you can fabricate a better intake than Ford did.
More air in and out of the engine means better performance.
A turbo is the biggest performance mod you can do on a diesel because of the huge increase in air flow into the engine.
About changine the transmission, how much do you drive the truck?
If you are running 100 plus miles a day then the swap would repay a lot sooner than if you are driving 100 miles a week.