I just put a 3/2 lift on my '04 Sport with XREAS and it was not easy... ended up spending the whole weekend on it and broke one of the XREAS seals ruining the whole system. My truck does look great, however drives awful and bumps and rattles. But I plan on pulling the whole system out and...
I also drive an '04 with a V8 and I get the same smell when the back window is down, but im pretty sure its nothing to worry about and changing the exhaust would not help.