If you could find a good deal on a Cummins 4BT, that might be an option for you. Google "Cummins 4BT conversion" and you'll come up with lots of stuff. The 4BT is the 4-cylinder version of the more well known Cummins 5.9L (6.7L after 2007) 6 cylinder engine. The 4BT is 3.9L (now 4.5L), but I think quite a few people have put them in 1/2 ton pickups and love them. I think they'd probably be okay for a Suburban. Max power is probably less than the 350, but I would guess the toque is probably about the same.
Not sure what the bill would be, but this guy put one in a '93 4x4 Suburban and is claiming 26 mpg (which seems optimistic, but believable to me):
Just a thought...