Yes, with a carb intake from an older 2.3.
And yes it is much easier than using a FI equipped system bcause it is basically a "computer free" setup. I think you can use the 2.3's distributor/ignition module in the 2.6 too - but I'm not quite sure. This is what I plan to do to my truck soon - so if you find out for sure - please let me know. 800xl is the resident expert on all things Isuzu here - not me - so maybe he can help you and I with that info.
With a properly set up and tuned weber 38/38 it should be just as powerful and get approximately the same gas mileage. A weber 32/36 will also work too - but it won't be as potent. I would choose the one-wire electrical choke model - because it is a lot simpler to use.
The 2.6 should bolt right in with a little modification to the stock motor mounts. The only problem you might run into is the shape of the 2.6's oil pan might be a difficult fit in a Luv - but I'm not quite sure about that either. (That's also another good question to ask 800xl.)
The tranny should bolt right up, and so should the new rear-end. You just have to use the newer driveline to match up to the tail shaft of the 5speed and the yoke connection on the newer rear-end, plus you will have to use your old leaf springs on the new rear-end to get your wheels to stay centered in the rear wheel wells, and then you will also have to relocate the little tab/bracket that the junction box for the rear brake lines bolts to from one side of the rear-end housing to the other.
A 5 speed tranny/driveline/rear-end combo from a mid-to-late 80's Isuzu Pup should work just fine. With any luck you can hopefully get the 2.6 engine, tranny, driveline, rear-end, etc. all from the same truck. The driveline's on both your truck and the newer Pups are basically identical in length and size, and they both use the same u-joints.
Then you just have to sort out what clutch parts you will need to use and it should be one heck of a good running truck. (That's another good question to ask 800xl.)
It sounds like a lot to do - but it's just a simple basic step-by-step process that IMHO will be well worth it to finally morph your truck into a much better ride.
This is a downloadable self-extracting zipped file on all things Weber that Ben has been kind enough to host here for all of us:
http://www.luvtruck.com/pdf/Weber_files.exe
Here is a great source for used parts:
http://car-part.com/
And here is the best place IMHO to send in your old cam and get back a re-ground high performance cam for your engine:
http://www.deltacam.com/
Good luck!