all my wheeling buddies are on tons and wont stop with the whole "DANA 60" horse crap.
My whole group runs 40"+ tires so i dont think downsizing is in my best interest if i wanna follow them around but i totally agree with what your saying.im gonna try and beef this thing up and go wheel!
That is due to them buying their wheeling skills rather than earning them wheeling a stock/near stock rig, and feeling like you have to keep up with them when wheeling, reinforces "the bought not earned" label. 95% of the trails out there were all being run 30yrs ago with 31 and 33" tires with open diffs and one t-case. For most of us old school wheelers, the general rule of thumb is, the larger the tire, the lower the skill level of the driver.
When wheeling with someone new, or running smaller tires, you are supposed to run trails they can handle, or at the same speed the smaller tire rig is traveling. Sure it takes longer, or might not be as fun, but if they had ever wheeled a stock rig, they wouldn't be complaining.
Based on your stated driving style, drivetrain set-up, and tire size, there is no reason why the Toyota axle can't hold up, once you have either upgraded or replaced the 30yr old components. Based on your current budget, I would buy an ARB for the front axle, and carry the spares from the axle you just bought until you can upgrade the components. IMO, there is no need to wheel w/locked front and rear axles all the time, it makes tight turns all but impossible, you get pushed around a lot, not to mention the added stress it puts on drivetrain components.