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"Taller gears" is a reference that a lot of folks use to describe higher road speed gears for less engine rpm.
There are four different differential carriers. The 3.31:1 and 3.54:1 Merc-O-Matic ratios used the 1M-4205-B carrier case. When the ring gear gets smaller for the low number "higher speed" ratios, the bolt circle gets smaller too. You can use those high speed ratios if your axle has that carrier case. The Merc-O-Matic was designed to start out in intermediate gear then shift to high gear unless you pull the shifter down into low gear. With the stall capability of that big torque converter and decent low end torque of the V8, it makes for a good city and highway combination. The higher speed axle gearing compensated for the inefficiency of that big old torque converter. If you go with anything slower than 3.54:1 your going to get out of the highway range pretty quick. It will be OK for city but the rpms will be too high to keep up with highway speeds.
Lets just hope that your gears are good. You won't want any 4.27:1 ratio. Keep what you have in case you just have a bad axle bearing or something of that nature. All it will cost you to check yours out is Dana 44 pan gasket and the work it takes to do a good shake down on everything to see what's loose in there. It likely could use some new gear oil in there anyway. Hell you might find something rattling around in a brake drum. It could be something simple. Always do the easiest thing first when troubleshooting.