This engine shouldn’t overheat, even in the warmer climate you enjoy in Cyprus. Is the radiator in good condition? If not, I’d change it and also think about fitting a good-quality electric fan kit.
The Discovery transfer box will fit straight in with no modifications. You’ll have to use the lever and handbrake from your existing box – but that’s it. However, if you use the extra speed that the Disco transfer box will allow you, there’ll be little improvement in overall economy.