if you go larger than the 30" tires you will rub without a lift. the 255's are about 29" tall about the same as your stock tire size other than they will be a little wider. My blazer was lifted with the same wheels as you and 31's and I still rubbed a little, nothing a little fender trimming won't fix

My 98 came stock with 205/15/15 and there was more wheel well then wheel. I put 265/75/15 (31x10.5) and it looks great! However, I am surprised at how much power/acceleration I lost. I knew the larger tires would make a difference but not THIS much. Is it possible to get the original power back via PCM or Hypertech?

you won't get your power back, but that will correct for your speedo error and recalibrate shifting points. The only way to see your "power" back is if you re-gear. You probably have 3.42 gears, you should have at least 3.73 gears with 31" tires

Spacers
 

Can I have some of the money you're throwing around on tires? I'm poor.