I just got my 2nd 2006 Defender diesel for exactly the same purpose. The diesel is a quite reliable engine, I would say more then the petrol. Then again, the diesel is not really made to play in the dunes, but you can be sure to be able to get thrue any desert with it. It just doesn't really like the higher dunes. But this is in a way the same for the petrol. The car itself is quite heavy itself and just not build for playing on the dunes. Keeping this in mind, you can enjoy the standard TD5 and TD4 in the almost same way. Chipped, both reach easily 400-450Nm torque and do an amazing job. Talking about rocks and mountains, the Defender is quite outstanding I would say. Robust and really going everywhere and a bit more easy to drive than a petrol engine. Going steep with the diesel in low gear is unbelievable great and easy for both.
My personal opinion: The petrol Defenders are difficult to find, especially in a good condition, they are quite old. Fitting a petrol engine into a newer one is not worth the money. The TD5 is best to tune (change the turbo and you get up to 220hp), the TD4 is more smooth, but still quite expensive. From the costs, diesel is double the price and not always easy to get (you need to get a diesel card for Abu Dhabi, stations don't always sell diesel etc.). But still, I do love the diesel since the engine is just running great and reliable, even more when thinking to go really off road and away from civilization.
Cheers,
Manuel