For the price of collecting all of the required parts, odds are good it would be cheaper to find a high mileage donor duramax vehicle and swap the engine, trans, and transfer case over to your 1500.....that being said, if you are dead set on the quad steer, I would say swap that running gear over to a duramax, but I am not 100% the quad steer axles are going to be strong enough to stand up to the low end torque abuse a duramax would put them through.
I wouldn't want a 4L80 behind a duramax unless you like rebuilding/replacing transmissions. The added weight of the truck, running gear, and the towing cabilities of the the 2500/3500HD trucks mandates the Allison transmission. The 4L80 didn't take the abuse the 6.5l could put out, and it was never put behind anything bigger than a 6.0L. The 4L80 is fine and dandy for small blocks, but big block gas engines (8.1L) and the diesels all got the Allison or the 6L90E.
I wouldn't want a 4L80 behind a duramax unless you like rebuilding/replacing transmissions. The added weight of the truck, running gear, and the towing cabilities of the the 2500/3500HD trucks mandates the Allison transmission. The 4L80 didn't take the abuse the 6.5l could put out, and it was never put behind anything bigger than a 6.0L. The 4L80 is fine and dandy for small blocks, but big block gas engines (8.1L) and the diesels all got the Allison or the 6L90E.