6.9's for the most part were good motors. If you want to restore it, I suggest you get an LMC truck catalogue, tons of parts.
6.9's with a good fuel system (ie good injectors, right timing, and good IP) will get fairly good fuel economy. But your looking at one with a C6, so depending on which rear end, could get anywhere from 12-16mpg. C6's are a strong tranny, but the torque converter never locks up, and dont have overdrive, hence the bad fuel economy. My truck when N/A got around 17mpg, but I have a T-19 4speed manual and 3.54 gears.
The body on these trucks are pretty good, no real major problems with them. The weakness in the powertrain, you dont have to worry about with a N/A IDI, it will last a long time with proper maintanance.
Dont know if its okay or not, we would need a pic. They have a TTB front diff, twin torrsion bar FYI. Basically kinda a independent front suspension. Some like it, others dont.
I would rebuild the 6.9 thats in it before buying new, its cheaper, and you can upgrade things in it.
Yup, a 7.3 will fit the exact same as the 6.9.
The weaknesses in the engine are, I would say most prominant are the stock head bolts/head gaskets. The head gasket design wasnt all that good from the factory, and blowing out head gaskets happens every once in a while. Some people do the head gaskets with the better upgraded head gaskets, and replace the head bolts with head studs (much stronger). The valve guides caused them to burn a little oil, by design. Normal oil consumption I would say would be around a quart every 500 miles. The glow plug controller on the 6.9 fails sometimes. It may fail in the off position, not sending power to the glow plugs, or on the on position sending power to the glow plugs which in turn would burn them up. The rockers werent the best design, some upgrade to the 7.3 rockers. The oil cooler sometimes starts to leak oil, which is more than likely caused by the O-rings going bad. The lift pump wears out sometimes, but that happens to all vehicles over time. Other than that, not much to worry about with the 6.9. I havent had any problems with mine and I've turbo'ed and turned it up (knock on wood