So its been a long time since I updated this thread. A couple weeks back I cut the end off the sending unit and brazed on an extension, lowering the pickup several inches and deleting the filter "sock" on the end. I also bent the float rod so it sits level with my extended pickup inlet at the bottom of its travel, and still swings all the way to the top of the tank. When I initially pulled the tank the gauge read "E" with 10 gallons left inside; when I put those ten gallons back after the modifications it now reads ~1/4 full.
I got the fuel tank reinstalled with all new rubber lines (except the really big hose to the filler neck), and extended the pickup on the sending unit to reach closer to the bottom of the tank. So to date, I have replaced the lift pump and the firewall fuel filter, all the rubber lines from the tank, and deleted the filter "sock". The truck is still a tad slow, but I knew it wasnt a racecar when I bought it. It now will run at highway speed without misfiring/shuddering terribly and makes at least as much power as my 305 powered Blazer did. I dont know which of the repairs had the most effect, but I am satisfied with how it runs. I drove from LA to Barstow and back last week to pick up a Dewey 24V DC generator (aka "BAPU") from that auction website, and the truck ran well for a 35 year old MV and averaged around 17 MPG. Overall this is a big improvement over 14-15 mpg and being borderline-undriveable on the highway.
I picked up a CUCV injector pump core from an outfit in Pennsylvania (Hillbilly Wizard) for $150 which I am going to get rebuild at Diesel Care based on recommendations from this thread. Plan is to eventually swap in that rebuilt pump and keep my tired (but known to work) pump on hand as a spare.
Here are some pics of the sender modifications I ended up doing. Notice how much straighter (thus longer, and with greater travel) the float rod is in the last pictures than in the first one. This gives an idea of how much fuel capacity was added by lengthening the pickup:
Original pickup geometry
Extension mock up:
Tube brazed on:
Modified float at "Full"
Modified float at "Empty"