The key to towing is what you can stop not what you can pull. It is also about control, which plays into the vehicle weight and size. In this case your changing of the engine will give you more power to pull but it will not give anything in the way of control or stopping power. The ZQ8 has a towing capacity of 3000# according to my research, which is the same as a regular truck with the 2.2L engine. The 4.3L 4wd trucks can pull about 5000# and that's it. Much more than that and you become dangerous even with trailer brakes. This was looked up for the 2001 model year, and the 4wd have the larger front brakes and rear disks. That will play a huge part in what it can tow. The 96 still has the smaller front disk, and most likely drum rears, so be warned your towing may be lower than mine. I would stick with towing around 3000# or less.
My ZQ8 doesn't have the no towing sticker, but what's left of my owner's manual for the truck says that the Extremes should not tow or haul anything.
