I just replaced mine when I did my lift. Seems like the right thing to do when you're that far into it. Having done this job, I have a few comments and a question myself.
First, I had a heck of a time finding the right bushing. It took several trips to the local parts store. The first one I took home was too long and not the right diameter. When I returned those, I was told those are the only ones listed for my truck. Then they started looking in the F-150 section of the Spicer catalog. However, those weren't in stock. I picked those up when the arrived at the store and took another shot at an in stock set. None of those fit particularly well as far as I'm concerned. I had to put them in the vice and make them a little oblong so they would stay in the axle beam. Then I had to return the other set that was wrong.
That's the comments... here's the question: when that bushing is installed at the factory, is it flared on the back side to make it stay in the beam? Mine was difficult to get out. I had to push the rubber out of it then use a cold chisel to "fold" over the backside outer edge and push it through. Then like I said the replacement didn't fit tightly at all. I'm wondering if there is a tool that I need to complete the job properly.
Another comment about your steering problem. Your visibly bad bushing notwithstanding, I had a steering problem that I described exactly like you did. I checked everything, ball joints, radius arm bushings, etc, etc. I finally convinced myself that it was ball joints and bought all the parts to do it including a handy ball joint press that makes the job doable at home in the driveway. Turns out it was a completely frozen front U-joint. When I pulled the thing out of the diff, it was rigid in my hand. I stood on it between a couple of blocks and couldn't make it flex. I am afraid to imagine what kind of damage that could of done had I engaged the hubs. Anyway, it gave similar symptoms as what you have mentioned. Thought it might be helpful.