I can't help with the intricacies of conversion. Having driven both GAS and DIESEL Motorhomes. I vote for the diesel MH. Since you are upgrading from a 70's era gas motor to a current gas/diesel motor I would be shocked if you didn't get alot more power and better mileage then you are now. Diesel should last a lot longer they are better designed for moving lots of weight. I like the quiet diesel (onan/cummins) generators - again lasts longer and uses a little less fuel per watt.

If money is an issue, the gas motor should cost a lot less to install and should be taken into consideration. Unless you have a friend willing to donate his used DMAX motor...

However, I know many a diesel RV that get in 5-6 MPG range, so I wouldn't expect great fuel mileage numbers. Granted these are 40' RV's that empty weigh 23k and towing a car.

Not that I believe either of these motors are the holly grail of RV motors. But have you researched the most common motors found in large RV's? (Cat / Cummins) I would want all options on the table to pick thru, before I made my choice. Especially since just PARTWISE you are looking at spending some serious cash.