A member over at offroadrangers.com just converted his live-axle ranger to an AVM manual hub set up, but it isn't cheap. It is cheaper with used parts but still... Best I can tell, you need the pvh halfshafts, and possibly the hub/bearing unit from a PHV ranger, and of course the avm manual hubs.
Nothing is wrong with the live-axle setup, most you might lose is 1mpg or so. There are some advantages to manuals, less wear and tear on the front axles, diff and driveshaft. If you break something up front while wheeling (ie cv-shaft) you can disconnect the hubs and drive home. Also you can use 2wd low range (not really needed but it's cool).
You could also say that if the hub-locks themselves are the weakest points, you would break them before the cv-joints. Seeing how the hubs are only $97 per set it wouldn't be horribly expensive to replace a broken one.
You shouldn't need to replace your wheel, most all aftermarket wheels have centercaps that you can just take out.
You should be okay either way to crank the torsion bars a small amount. Too much will be bad reguardless of the hubs, and will wear out suspension components faster, and ride harsher. Mine are adjusted about 1" higher, and I wouldn't do more than that, since our front ends don't have much travel as it is, the suspension will top out fairly easily.
Here is the thread for offroadrangers.com;