In saying all that, i have 3" lift on my D40 with 33's. Even been pulled over for random breatho's, cops dont look at it twice. Even had the highway patrol here in Knox look at it a few times, they aren't too interested.
They are too busy scanning rego's, breatho'ing people, catching "hoons" and raising general revenue to care about 4WD's much mate. As long as your car looks respectable and well looked after, the cops don't look at you.
But in saying THAT, no it's not "legal". But it's up to you. I've had 33"s for over a year now and never had troubles. Just drive sensibly and safely. Im 29, had my license since 18, never had a fine of any kind, and always had my 12 points on my license. And my last two cars were bloody fast V8's. It's all about the way you drive. Don't bring yourself attention and it'll be fine.
Performance wise, noticed a TINY bit of difference, but stuff all. As i don't really rev my Nav over 2200 revs, i don't notice the change in fuel economy or performance.
I'd never go back to smaller tyres.
Ya mum's bum