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2" of lift will not be close to enough for 40's. I really don't think 10" will do it without some serious body mods.
I do not believe anyone makes more than a 2 or 3 inch lift so you would have to go with a full custom.
As far as the 3.7 being enough to push it, I once had a 87 Toyota PU with 50's on it with the stock 4 cyl. I had to use 5.16:1 gears in the rears but it was exactly like stock. The speedo was right and the trans shifted fine. I think it even rode better than stock but that is not hard to do with an 87 Toy.
If you are intending on just lifting and changing tires without any gear modifications, NO, the current config would be killed with short work.
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2007 Nitro R/T, Chrome Bug Deflector , In Channel Vent Guards, Stainless Bull Bar and Nerf Bars.
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