The VW diesel powered Samurai and Sidekicks are realatively slow so highway driving will not be the best. If you plan of driving your vehicle to the dunes and light-trail riding, you'll want to take secondary and tertiary roads (which can be a plus). If you like to cruise on the freeway, please reconsider the diesel swap. You'll be a slow moving road block on the freeways.
An all-around better deal would be to get a Samurai and install a 1.6 8-valve or 16-valve engine, The wiring and hardware kits make this simple and with extra care, you can get smogged. Or, you could get a Sidekick with the better engine in it already (smog, no problem) and then swap a set of Toyota mini-truck axles under it, or beef up the IFS depending on preference. Both of these scenarios can happen in your price range.
So the question arrises.... Do you want/need round headlights?
-Eric