With regards to the XJ's frame, it's a three sided frame-rail, spot welded to the floor of the Cherokee. It's not really a "uni-body". The frame could be replaced---at great expense, I would think, since all of the spot welds would have to be drilled out, and the new rails spot welded back in; very labor intensive. Probably cheaper to by a "new" '96.
I'd say if parts of the rail are rusted out, it's very likely than the whole frame should be replaced $$$$.
It's a possible home-shop project, if you have the tools, time, and fab skills.
You could build a new frame out of 2x4x3/16 tube, cut out the old, and weld in the new.
As the body shop's quote shows, OEM-type replacement rails are quite expensive. His quote is probably for just a partial rail replacement--in the area of rust he can see.
Sounds like one of those projects, that once started, will continue to expand in scope--and in $$$$. Once you have a couple of thousand invested, you will feel compelled to through in another couple of thousand when the shop comes back to you with the "bad" news of a need to replace even more rail.
It's the kind of project that I'd do myself. I wouldn't hire it out to a body shop, unless you want a restored '96 costing more than the Kelly Blue book value.