What model of wagon? If it's pre-VE then motor will need to come out. It's not hard to do as LS's are pretty simple beasts. Honestly if all it really needs is some gaskets and hoses there's no reason to not fix it. Power steering rack I wouldn't be worried about if it's just seeping a little, the rack in my VY has been seeping (hasn't dropped any oil) for 4 years. As for a roady, general rule of thumb is if it's not dripping it's fine. If it's not THAT bad then degrease it before the roady, but if you can swing spanners yourself the gaskets are cheap.
If you want to go the whole hog rip the heads off while the motor's out, if the bores still look OK then whack a cam and valvetrain in it, tune it and go for another 200,000km.
I'd be all over an LS powered Colorado (so would everyone else at work, we've mulled the thought over). Problem is in the wet they can be a bit iffy under power - double the power/torque and you'll have a handful.