I've never heard of any frame problems. The factory GM hitches on Suburbans, Tahoes, Trucks, etc. in those years were supposedly weak. However, I often had over 10,000 pounds on the factory hitch of my '05 dually with no problems.
The 8.1 is a great engine; it's smooth, quiet, and powerful. I had one in an '01 dually and it was ALMOST the equal to my Durmax. I got 10 mpg period; towing, empty, loaded, highway, off road, it didn't matter.
I'm also currently looking for Suburbans form those years. 8.1s are more plentiful than you might think. I'm watching several on ebay right now.