I agree with chevy_man-
All healthy motors do in fact throw out water from the tail pipes, I also have a 2004 Yukon all-wheel-drive, but with only double your miles! Yes- if you take care of it, ( as you already do ) the truck runs and performs fine? Drives great? Has great power throughout low & hi speeds? If it does? You are fine!
No need to upgrade, no need to spend the extra money on it, how ever,,,
Step 1).
( if water is disappearing from radiator) check to see if you have a leak at the exhaust Manafold?
Step2)
check to see if your water pump has a minor leak? Sometimes they will only leak when the vehicle is at hi rpms! It will leak threw a small hole under the bottom of the water pump!
Step3)
but if? You really want to upgrade? ( like I do ) go to a really good junk yard ( LKQ ) and do your private I RESERCH, and make sure you do find a really good motor for it, but only if you can see it in the car with the correct mileage, so u know what u are buying? Not a company 5.3 with 300k miles, they usually go for 400-750, but no more then that, unless it's new! Sell yours for 300-400 and it might cost you less then you really want to give!
Step4)
upgrade you said to a nice 6.0 liter- you need a full swap over, from computer, monts, wire harness, plus down to all the gaskets, from excaust to the rear main seal! ( yes hundreds ) but end result? More power, more fuel cost! Unless your pulling a boat or a trailer? Your Yukon u have is a cruiser, not speedster! As everyone here will say the same! Drive it like a Cadillac, and use it as a bull dozer to do the job!
I myself also wanted to upgrade to! We all do here, but then we think? Do we really want more power? And then more gas? It will be good! But all and all, just put 500 in a exhaust sys, free flow air raid sys, and or a power programmer, another 300 dollars, and a few other mods! And now it's way more powerfully then a 6.2, let alone a 6.0 liter, with lower mpg!
All and all! We here all believe your motor is good! Take care of it and it will out last you!
God bless!
A YUKON LOVER SINCE 2004