The LJ/KZJ Model 'Cruiser is a great vehicle, Rugged, comfortable and reliable.... a good choice all round but IMO if there is no major price difference, you're better off buying a vehicle that was either a Brand new Import or one that was a recon import... preferably one with the 1KZ-T 3.0 liter turbo... the issue with the "body permit" vehicles is that no one can be quite certain just what sort of horrors a shiny coat of paint and a smart interior are hiding!
I doubt you should place much trust in the odometer reading, turning them back is very easy, and these old cruisers can do hundreds of thousands of KM without looking tired if they've been smartened up a bit.
In general the Toyota L engine is pretty bombproof, although 400K is a bit of a stretch, if it's been maintained well 250K+ between rebuilds is definitely a possibility. Small note though, I believe the 2L motor has a capacity of 2.4 Liters... Its the 3L thats a 2.8.
As for the engine question, The head cracking issue is a new one on me, Milindu has experience with an LJ that has this engine though..
Overall this is an excellent vehicle, but again, better buy would be vehicles that are original.... The general price range is from 4- 4.5 Million, although some people will quote more.