I don't know the parameters of the fuel pressure coding. 2 psi does not seem like much, but perhaps the code is triggered due to the suddenness of the drop. I don't see why you couldn't shim the fuel rail and run that way until you get the lift pump
A 150 GPH lift pump is plenty, well into...
It sounds like you are faced with either a rebuild or a replacement.
The 700R4 is probably original spec in your 1 ton. I had an '83 K20 with a 700R4, and never cared for it. The overdrive was nice on the highway, but it too had shifting problems similar to what you describe. The TV cable...
Do you have an MP5? I used to compete in tactical carbine matches, and had a buddy who had an MP5. It was a sweet little carbine, but was a pain to keep running right.