We have owned three H3s:
'06 H3 base model
'07 H3 Adventure model
And currently:
'08 H3 Alpha with the Adventure and luxury package.
On the Alpha, we have a 2" lift up front, 35"s tires, rear electronic locker, rock sliders, custom under armor skids, custom bumper, and a 9,000lb hidden winch. It tows my built up TJ and trailer all over the South East with ease, accelerates 0 to 60 faster than most sedans, and has been through a lot of the offroad parks around here. We built it to be a rescue vehicle for my TJ- so it always has CO2, tow straps, spare tools, and a hi-lift in case I get stuck in the TJ.
The 5.3 is awesome in this truck and between the comfort on road, the capability off-road, the towing, etc etc, it is easily my favorite vehicle that we've owned. My wife wants to race it in ECORS, but I keep explaining to her that it is the TOW RIG, and that when it breaks, we are s.o.l. However, when she moves on to the next ride, I believe I will try to figure out how to get that thing out to a race or two. Biggest negative? ~15mpg City/Hwy average.