Rear end

What I would do first (after the GREAT advice to clean it first!) is pull the cover off, and actually see if it has a suregrip, and what ratio it is. Then put some appropriate fresh fluid in it, and decide what you wanna do.
I agree, the 8 1/4 should be fine, with a sure grip added, and a reasonable gear.(3.23/3.55)
For a stronger rearend? HERESY!, but I would suggest a mustang 8.8. As strong as a 8 3/4, much more available, and MUCH cheaper. You can find them with disc's, "posi's" and good gears. An explorer rear works too, if you narrow one side and use two short axles.