I personally do not like 404s but that is a nice a mog. Its been listed for a while and the price is a little high but if its on Expedition Imports web site then it must be a good truck, Scott is a great guy, very reliable and stands by what he sells. For that price you are getting into the range of the diesel mogs and there is no comparison.
That engine might be a turd but its 'better' than the detuned 85hp M180 that was originally in there. I put 'better' in quotes because is it really better?
The mog is an overall system and it was very well designed system, its 50+ years old and dropping a new engine in may not be the best thing. Mogs have different oil sumps and pumps to account for extreme angles, they also have different carbs for the same reason. You new engine might be better on the freeway but tip it to 45 degrees and see what happens.
In general changing out any part of a mog affects the whole thing. Jeep guys will tell you that mog axles break all the time but they never break on a mog regardless of the amount of abuse they take, why is that? Its probably because they are putting 300hp through a system made for less than 100 - the numbers simple do not add up, mog components are not indestructible.
The 404 tranny uses journals instead of bearings and it is known for overheating and failing when driving on the freeway, most 404 owners stop every hour or two and allow it to cool down. I can only more powerful engine makes it worse as it will allow you to fast more often and may even allow you to go a little faster due to a higher redline. To go anywhere in a mog you have to run it at very high RPMs, how reliable is that ford engine going to be when sitting at 6000rpms for hours and hours. It may last it may not, the M180 is crap but its a proven piece of crap.
If going fast or spinning wheels or traveling in comfort is your thing then don't buy a 404. If you want an awesome off road machine get a stock 404 with all its original parts. If you really need a mog for traveling get 416 or a 1300 with fast axles and AC.
Rob