If the frame and bulkhead are solid, I'd try to talk him down a bit. There are a lot of small parts missing there that would add up if you tried to replace them. Heck just the basic seals and fasteners would add up. A functional resto would cost a bit, and then any conversions you do wuld likely triple the budget. Ask me how I know.
Another option that would be more or less drop in in one of Robert Davis' conversions. It wouldn't overpower the drivetrain, and would be relatively easy to get parts for.
It isn't a Jeep. Do not build it like a Jeep (or FJ, or Bronco, or Scout...), because the aftermarket support isn't there (which means a lot of custom parts) and the basic vehicle design (frame/body) does not lend itself to that sort of build. It's a funky old rig that rocks a whole 'nother vibe. Think safari rather than Extreme!