The turbo has alot of room surprisingly. The LB7 was actually designed to fit into the older trucks, theres to much evidence to support it. The drivers side exhaust manifold with the indent to clear the steering shaft that the newer trucks didn't need, well it is needed for the GMT-400 and fits perfectly. The notch in the oil pan to clear the steering linkage happens to be i nthe PERFECT spot to cleer my steering linkage, and without it I would have had to have modified the pan. And there was a few other things as well. Yes fitting the intercooler in was the biggest hurdle to overcome. Most have gone with a DODGE intercooler that is shorter and wider to fit in, but I stuck with a DURAMAX intercooler. All this being said, the 4L80E would not be my 1st choice for a trans, espescially not a 4L80E without the later revisions in it that started in 99. GM detuned the DURAMAX BIG TIME when it put a 4L85E behind it in the vans, and even detuned quite a few have managed to tear up the much stronger 4L85E with the later revisions in it. Then you come back to the problem of your putting an engine in that is worth as much as the truck your putting it in. The LBZ is not going to be as seemless of a swap as mine was due to the changes in wiring and data coms. Surprisingly the 01-02 LB7 used almost the same wiring structure as teh earlier 95+ GMT-400's did, and wired in surprisingly easy and left everything functional.
In the end though, you will be left with an engine that can EASILY fold up the frame in your truck if you ever want to push much power out of it. I have rippled my frame in the rear where the leaf springs atatch because it simply was not designed to handle the torque. It has required some careful tuning to keep the frame and such from tearing up with the amount of power I'm putting down, and I'm not really putting down that much. If I had it to do over again, I would not do another. The frame and body just isn't up to the task of the power that the DURAMAX puts out, and in the end you'll have more in the swap than the finished product is worth. If your deadset on doing it, then I would box the frame in and gusset it to handle the power, be ready to swap in the front end out of a newer truck to handle the power as the GMT-400 front end is NOT up to it nor is the puny single piston calipers. And when it's all said and done, you will have MORE into the swap, than you could ever hope to sell it for. I know GM designed the LB7 in alot of ways to fit into the GMT-400 trucks, but I bet they waited for the GMT-800 after realizing the truck just wasn't up to the task of what a stock LB7 could do.