That's the advice I'd give my kid. Most decent CJ-5's that I see these days are driven by a 50-something guy that has dropped $10-20K into it. My neighbor did a similar restore on one of these a few years ago, rebuilt everything but dropped in a small block chevy. The rest are clapped-out death-traps waiting for Pewe to fly in and tease it back to SoCal for a dirt-every-day magazine article (which actually sounds kind of fun).
But you're not my kid, and I don't know the rest of your situation (family support, shop, available time and money, etc) Sound like you've got the fire and the interest to make it happen, and someone's support, based on the '00 chev 1500 available to tow with.
A couple of friends had 5's when we were seniors in high school and for a while after. We rallied the **** out of them and we had a ball. Took them to St. George for spring break one year, actually two years. Crappy gears, no heat, sloppy steering. We didn't care, it was cool and with enough gas pedal, we climbed and bounced our way through quite a few places. One had a 6 with a 4 speed, and one had the V8 and 3-speed. Didn't really matter, both had 15 gallon tanks and we had to stop for gas a lot. But with the top off and tunes up, who cared.
I hate to be buzzkill and ruin a good project and restoring a great classic 4x4. So I won't.
But I will tell you what I have done so far, and for my boys.
I have an '81 CJ, but it's a bad example because I was never that interested in having it be a daily driver; I hurried and slapped full-width axles on it, 38's and then dealt with all the rusted out crap for years until some friends intervened (Extreme Scrambler Makeover) The '77 CJ-5 that you describe doesn't sound much different than the CJ I started out with. We literally started over in '08 and the only thing from the original CJ is the windshield wiper motor.
I picked up a Sammy and parts for my oldest for about $1500. 3" springs, rear locker, 4.16:1 case, 30" tires. For other reasons I ended up selling it, but it was legit and would have been a good rig.
I picked up a '90 YJ for another son for $2400, it already had a rear locker, 3" lift, 33's, 4:1 case and a 4cyl w/ exhaust leak. He and I stuck a locker up front, fixed a couple of items, and have done a few trails together. He was "ok" with a Cherokee, but really wanted the open top CJ/YJ/TJ.
Around the same time, I picked up a '90 blazer for $1500 that needed axles and a couple bolts tightened in the steering column. Found some axles on KSL for $150, used 35" tires for $500, H2 rims for a couple hundred, etc. Total investment $3300, including a new radiator. (I use it to clear snow, but it would make an awesome car for a high school kid, or anyone else really).
For the next kid I'm looking at XJ Cherokees, mainly because of bang for the buck. I want it to run most of the time, expecting a few hiccups now and then. He's not interested in working on cars. I want to spend what little free time I have playing, not wrenching...but sometimes wrenching IS playing. If my kid was into wanting a project, then I'd consider an old CJ, and plan on replacing just about everything. He's not, so I'm not.
What do you want? As I recall from your other post, a basic 4x4 that you can drive to school. You've talked about Rangers, Samurai's, 4-runners and now CJ-5's. (And XJ Cherokees that people keep suggesting). Go check out some of these different rigs and test drive them. I remember driving some old jeeps and pickups when I was in high-school looking for the same thing and a couple of those scared the crap out of me. I learned a lot though.
Back to the CJ:
CJ-5: high cool factor, lots of wrenching and parts replacing. Very cool when it runs.
XJ: decent cool factor (not like CJ/YJ/TJ), a little wrenching, lots of driving. Oh, and being able to see through the windshield in the winter.
Whatever you get, you'll learn a lot by working on it. If you play it right, you could find a rig that just needs some work, fix it, learn from it, sell it and move up. It's not a right or wrong, you'll learn something in the process either way. If the CJ doesn't work out, you'll be able to sell it for $800.