Re: what do you think this set up is
If you want daily driveability I would stay away from Nitto Mud Grapplers. They are loud and wear down fast. If it was a trail only truck Nitto's would be fine. There are plenty other mud tires out there that are much better for the road. Look into Toyo's, Goodyear MTR's, etc..... Even the nitto trail grappler might be a better tire for you.
You can do a 3 inch lift with 37's as well. To do do that you will need a leveling kit and cognito upper controll arms and spring spacers for the rear.
If you are looking to offroad it I would stay away from 40s unless you like replacing axles and diffs etc....
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