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
http://us.coopertire.com/tires/discoverer-at3-4s.aspx
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:
https://tiresize.com/calculator/