Just like the early 60s small, and only available with a six https://auto.howstuffworks.com/1960-1963-ford-falcon-ranchero.htm
No, it was a last-minute thing that was cobbled together. There was supposed to be a Ranchero from the downsized-full sized LTD wagon, but Ford nixed it after building one body buck. The prevailing theory put forth in a Ranchero history book is that with tighter economy and emission standards, Ford couldn't justify building them.
Yes, there were some compromises with the design. Keep in mind that in 1981, when the Durango came out, the Chevy El Camino was still being sold in pretty good numbers - over 45,000 min the 1980 model year. The last year for Ranchero production was 1979. The idea to make a new 'Ranchero' was most likely generated externally, from the private firm that converted them. Maybe they saw the potential in the overall shape of the Fairmont Futura coupe: The kicker is the roof line - cut off the rear portion of the roof, along with the quarter windows, cut off the package tray reinforcement between the quarter panels, and you have a huge open area to drop in a pre-formed fiberglas insert. The tail gate was the most difficult part of the whole project. Easy to see what was done, but not that easy to actually execute.
Yeah, I understand about the design, and, to be sure, using the wagon tail lights and hatch (how they would've had to do it to make it work) would've likely been cost-prohibitive. But is that any excuse for making a crappy compromise?
For any aftermarket vehicle modification like this, the cost of the conversion has to be as low as possible - otherwise you would price yourself right out of any sales. Don't know what the target price was for a Durango, but with the exclusivity factor, I would guess at something around $1,000 over the price of a loaded wagon. Dealers could try to mark it up more, but you have to have conservative estimations. A full-size truck needs to have the tail ights exposed when the tailgate is down - that's something that could happen quite a lot. The Durango is a very light-duty truck - i don't think it had any modifications to the rear suspension to allow increased load capacity. They most likely decided that tail gate conversion was the best solution. To 'show' the tail lights with the gate open would have entailed manufacturing a whole new (smaller) tail light unit, and maybe some new filler panel for the lower gate itself.
