There's all sorts of mods for these things! Don't listen to the guys that say sell and buy a jeep. I own a 91 Cherokee, a 96 Grand Cherokee, and two Bronco II's (an 89 and a 90). The Bronco's are cheaper to mod, and just as easy to find parts for as they jeeps, you just gotta get a little more creative and know what to look out for!
First off, as mentioned, join TheRangerStation.com, and also BroncoII.org if you like! Both are good resources with regards to the Bronco II!
The first thing you gotta understand is that a Bronco II is a RBV (Ranger Based Vehicle). This means that pretty much all the drivetrain components are the same (well... not the same, but interchangeable!) on a Bronco II, Ranger, and Explorer, with the exception of driveshafts, since the frames are different lengths. They share some of the same body panels, the same interiors, lots and lots of stuff carries over between them. Thats why its so easy to get parts; cuz there were millions of RBV's made!
Engine swaps are a common mod. The easiest for more power is a 4.0 swap from a 91-94 Explorer. The 2.9 and the 4.0 are in the same family of V6 Engines, so its a bolt in swap, (take the engine and tranny out of the Explorer, and bolt it right into your Bronco II) they even use the same engine mounts. You have to splice a few wires, and thats you up and running! The 4.0 and all its components bolt into the Bronco II just like they did in the Explorer! For example, the radiator and its relevant hoses all bolt up to the Bronco II in the factory spots. The Explorer replaced the BII, so thats why so much carried over.
A 302 also fits pretty good, but there's a bit more work involved. You have to drill a hole or two, use 5.0 Mustang Convertible engine mounts, and thats the engine in. Getting the transfer case to bolt up requires an adapter if you want to use a manual tranny. Wiring is more difficult, you MUST upgrade the rear axle to an 8.8 or you'll rip the 7.5 apart. You have an 89', which has a Dana 28 up front, which should be upgraded to a Dana 35 if you want to do a swap. 90' Bronco II's, and all explorers came with Dana 35's, and they're a direct bolt in swap, so thats easy enough to do. A radiator must be custom mounted, its a whole different job compared to a 4.0 swap really!
Suspension lifts can be accomplished in many different ways. Take explorer leaf springs and mount them out back, and you'll gain around 2in of lift normally. The front coil springs from an explorer will also raise the front of a BII some, although I'm not sure if you gain the same amount as you would with explorer leafs in the back or not. Skyjacker makes a good lift for them, as does James Duff. (check out James Duff for lots of good quality Bronco II parts like bumpers and stuff!)
Some people chop the tops to make them like the big bronco's, some people lower them, I've even seen somebody bolt a Delorian body to the frame of one! :S As with any vehicle, your imagination is basically the limit with these things. Check out TRS and BroncoII.org and you'll be able to get an idea yourself, of what's capable with them!
Hope that helps a little!