the Donaldson filter is about the same price as the cat filter. maybe couple $ more. the hard part is finding them local.
i also have the adapter and cat filter sitting in the garage. not sure about using the cat filter with no water separation.
take out the fill plug and fill her up till it slowly drips out. install fill plug and you are done. the fill plug is on the diff cover where the bolt/oil stain is in the picture
there is a drain plug at the bottom.
if you have a 4x4 dont forget the front diff
I found this
Rancho setting suggestion:
Highway - Front 6, Rear 3
Sport - Front 8, Rear 6
Work/Tow/Haul - Front 6, Rear 8
Off-Road - Front 4, Rear 4
Not sure about the your other problem