I think it really depends on which vehicle you like the best, and then put the money there. For the price of a decent LR3 you could completely rebuild the engine on the D2, new driveshafts, upgrade the suspension, tires, add ARB lockers and HD axles front and rear, install bumpers and a winch, and still have quite a bit of money left over. Not only that, but a fully locked D2 will out perform an LR3 in the toughest conditions. The LR3 is a compromise of on and off road performance and will be smoother and better performing on the road.
If you are going to go with the LR3 then by all means sell the D2 outright. You'll get much less in trade.
David
I really do love her, and she has been awesome to me: 2001 Epsom Green Discovery II (114k Miles), Tom Woods Drive Shaft, STI 8mm Wires, Champion Spark Plugs, K&N Filter, Roof Rack and Brush Bar with Hellas, Nitto Terra Grapplers on 18" 'Hurricanes' is where I'm at now.
If I'm going to keep it when it makes it back down, I'm going to have to finish her out. Maintenance has been taken care of, and I will continue to take care of it as such. I'm not looking to rock crawl 'per se', but would like to get a little further 'out there'. I know this is extremely capable stock, but I guess what I see as on order of importance:
Suspension (It's really time, and I realistically should've gotten a slight lift prior to the new tires 2 years ago)
CDL Kit
Front Bumper w. Winch/Rear Bumper/Sliders (Those Rim with the Grapplers, but I know I should find a 16" Rim set that I like so I have more tire options and also better performance)
Replace crap rack that I have with Baja (or something similar, dependent on cost and timing)
Everything else I truly know of would be a upgrade or swap out as it becomes a convenience or due to time or damage. Am I missing anything major?