There are many things that make it hard to decide which way to go I'm sure. I would make a positive and negative list and of course you would be the one to decide. Ex.:
Positives: The 2004 is a known vehicle especially if you have known it since new, it has lower miles, you have some bond to the vehicle already and you know it's condition. If you caught the rust early it may not cost too much to fix. Some say the first generation AV is more like a truck then an SUV. No Displacement on Demand to deal with on motor. Three years is not really a long time if you plan to keep your AV a long time compared to the 2007
Negatives: The 2004 is rusting (didn't say whether it was cladded or not but cladded parts are harder to find), from your brief description it sounds like you want to put a lift kit on it and it doesn't have one yet. Unknown expense on replacing rusted panels and that can depend on doing it yourself or hiring a shop to do it. Some owners prefer the interior design on the second generation AV and consider it more of an SUV to a truck. (I have owned a 2004 Z71 and a 2008 Z71 and given a choice would still own the 2008 since my whole family loves the 2008 for many reasons.)
Positive for 2007 : It is 3 years newer and may be easier to find parts in future like body panels etc. It already has a lift and you mention tires and wheels (hopefully your 2004 already has tires and wheels-
) , I am guessing you have looked for rusting on the AV and it has none. Improved interior.
Negatives for 2007: It has almost twice the mileage as your 2004 so it may need motor and other drive-train work that can get expensive soon. As mentioned above three years is not a long time in age if you plan to keep it a long time. You didn't mention the vehicle accident,flood or maintenance record so that may be unknowns that you could discover later. Some members have mentioned problems in the 2007 AVs and the DoD system causing oil leaks and motor repairs so they stay away from 2007 AVs. Not sure what the actual percentage of problem AVs are though since those who don't have a problem don't post and all AV owners don't belong to the site.
If your deciding factor is finances over emotion then you need to consider true cost to own both ways and look at things like cost to repair and mod the 2004 as well as cost to insure and property taxes etc. If you choose to sell it then what price would you get for it?
If you look at getting the 2007 then look at it's insurance and tax figures in addition to possible repairs down the road such as engine repairs.
That way you will know how much money over lets say the next 5 years each option would cost you.
Either way you will not make money but one option may show you that it costs less to do over time.
Good luck with your decision.