What the law actually states is that any replacement for the original gasoline engine must meet the same or better emissions requirements for that year, make, model, and engine of the vehicle. So as long as it meets those it does not matter what size that engine is or even what brand it is. This is straight from my dad a retired CHP officer who used to do VIN inspections on custom vehicles. If this truck started life as a diesel it doesn’t even matter there would be no smog requirement to begin with, hence why I’ve always wanted to find a military diesel K5 Blazer to build.In 1996, the 245-horsepower 460 "Lima" engine was OBD-II and had closed-loop EFI with full emissions systems (EGR, secondary air injection, single exhaust with catalytic converters, etc.). The article says the 600 horsepower 521 engine in the truck has a Holley 850 carburetor, which is obviously not closed-loop or OBD-II compliant. If it was legal, it wouldn't be registered under a Montana LLC.
As for the Montana plates that might be more practicality than a legal issue. It’s a 3/4 ton commercial vehicle it’s probably still not cheap to register or insure in CA and you have to do it every year. Other states offer much cheaper registration and longer times in between registration. My parents now live in Havasu full time where there’s no smog to worry about and you can register up to 5 years and they still register everything in Montana for cost.