It depends how hard core u want to go.
I personally love the Hankook Dynapro ATM RF10s.
They are smooth and eminently streetable but are AT (and mountain snowflake) rated.
had them on 2 vehicles now.
And they are fairly affordable too.
BUT it sounds like you may want something a little bit more aggressive (but not QUITE a tire you put on only for offroading so still must be streetable)
Even though I have no personal experience with them two newer designs I might consider if I had to replace tires right now would be:
Falken Wildpeak AT3W
They are getting great reviews on the Toyota and Xterra forums
Another tire to consider hard is the
Also getting good reviews on the Xterra and Toyota forums.
The KO2 are a well established and respected stalwart choice they are a bit more expensive but are a known and respected quantity though they might be a bit louder on the road than say the Dynapros.
The new tire size you mentioned would give u a 2 inch taller tire.. which should be still ok but cannot be said for sure.. also u will start seeing some speedo and milage counter discrepancies.
My recommendation would be to keep the extra diameter down to 1 inch .. this will give you a useful increase in ground clearance of 1 inch... while still closely maintaining the stock feel of the vehicle on the hiway.
Play around with this handy tire size calculator to get a better sense of how things might look and affect your speedo: