1/8 diff in a pede tranny?

The biggest problem I can think of is mounting the motor close enough to the diff to gear it reasonably. You wont be able to mount the motor behind the diff like you would on a 1/8 buggy conversion, so the motor can is going to be competing for space with the bulkhead and the diff cup itself. Everything else should be doable, the shock tower could probably be bolted to the upper bulkhead brace, and the FLM arm mounts could be bolted right to the chassis.
Metalman, Im not sure what you mean by the maxx slider shaft comment. Im using shortened maxx sliders on my stock rustler diff, but theyre far from a final solution driveshaft. My rustler chews them up every few runs. Do you mean the 3.3 shafts? They would work Im sure, but you would have problems with the shafts extra diameter hitting the arms.