I have a 2002 half ton z71 burban with the 5.3. It has the locker in the back also. I can't say enough good about it. I have a show car that on the trailer weighed in at over 6000lbs. The burban pulled it all over the eastern half of the US and I continuously got almost 13mpg. My old trailer weighed 3000lbs empty, it was a big trailer. I just bought a smaller trailer and am looking forward to pulling it instead.
I get near 15mpg empty on the highway and pulling a car on a normal sized trailer I can get almost 14.
The 5.3 is flex fuel capable and I run the crap outta E85 cause it is much cheaper around here, still get almost 12mpg with it too.
I have 135,000 miles on this truck and it is doing great for me. I used to tow with a 98 vortec 5.7 in a silverado and the 5.3 is much better in my opinion. The highway manner of this motor is much nicer towing. It just feels like it has more power available all the time.
Only time I wish I had a bigger motor is when I pulled a Bobcat and trailer weighing almost 9000 lbs. It pulled it but it didn't really like it.
Another downfall on the halftons burbans of this body style is the rear is coil spring. The coils don't like alot of tounge weight. The 3/4 tons are leafs in the back.
If I had it to do all over again I probably would have went with a 6.0 3/4 ton. The 6.0 has more power and fuel economy isn't all that much below the 5.3, especially towing. Now, if you aren't gonna have a trailer living behind it like I have, the 5.3 1/2 ton is great!
Also, the "AWD" function on the transfer case is really an Automatic four wheel drive, not all wheel drive by definition. Basically, you can put it in "A4wd" and it will run the truck in 2 wheel drive until it detects rear wheel slippage. When it does it will engage the front wheels and the disengage when the rear wheels get traction again. I personally like it cause when the roads are "iffy" I can hit that button and send the wife out and she doesn't have to worry about running 4wd on dry pavement and dealing with shifting in and out of 4wd. I think the 3/4 tons have this too but I am not 100% sure.
-Sean
p.s. make sure you get one with the locker in the rear too. The difference that makes in mud and stuff is simply incredible. I have been in some spots where I would have been totally screwed with an open rear diff