Yes 16" rims will be a bit better but i don't think so much better, it's worth spending $90/ rim plus new wheel nuts for steel rims and new tyres. Particularly if I've read your usage correctly.
If it was me, when your exisiting tyres wear out, get a good set of AT rubber fitted and if possible LT spec. Tyres are a very personal thing and the source of many a spirited difference of opinion, but any reputable brand will be fine in my opinion.
cheers
Steve


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