well if you can weld you can do this on the cheap...
I would do this...
FRONT
-Rough Country 4.5" coils $130
http://www.ironrockoffroad.com/Merc...IROR&Product_Code=IR-X45FSP&Category_Code=XSP
home made sway bar disconnects $10
I got a farm pin for each side and cut and welded the rear sway bar link and welded that to the front... been holding up just fine... also cut down the rear sway bar link mount to use it in the front (it is now bolted to the front sway bar)
for the sway bar you could drop it an inch and redrill the axle side track bar mount, that could be done for almost nothing (however you would need a drop pitman arm as well that matches the amount of drop you are using on the track bar)
OR
you could build one that uses heims on both side and make a double sheer bracket for the frame side, I would also recommend that you make a new bracket for the axle side as well, this would make everything go a LOT smoother)
this would cost you about $60-120
for the rear I would make a 3-3.5" Bastard pack using either Dakota or S10 rear leafs... there are many walk thrus explaining this process, either way it is done with used junk yard springs, all you need is new leaf spring hard ware and leaf spring u bolts... so this would cost $25-100 depending on what you spend on USED leaf springs for a donor
http://www.cherokeeforum.com/f2/perfect-bastard-pack-maybe-48261/
http://www.cherokeeforum.com/f51/s10-springs-bastard-pack-1380/
http://www.naxja.org/forum/showthread.php?p=245106028
http://www.jeepforum.com/forum/f11/3-bastard-pack-leafs-s10-597341/
then I would get a extended rear shackle, for the price the Superior Automotive 13-4100 is hard to beat... it has to height settings (1.5" and 2.5") it can be found at MOST autoparts stores for around $25-$40 and it is very well made for the price
(you might consider drilling and tapping it to add a grease cert or getting a bolt that has a grease channel in it.)
then you should make a shackle relocation bracket, it is rather simple thing to make
http://www.naxja.org/forum/showthread.php?t=944040
http://www.naxja.org/forum/showthread.php?t=934581
then you will want to drive it around for a few weeks and let it settle... aft that you might find that the rear sits a bit higher than the front.. if this is the case you might want to build an all metal coil spacer for the front... should only cost you around $10 a pair
http://www.madxj.com/MADXJ/technical/technicalfiles/SRfrontCoilSpacers/FrontCoilSpacers.htm
you will also need new brake lines...
(1990-95) GM C1500 brake lines on the front and (1995-2000)Dodge Dakota on the rear
another thing you will need to address is the rear drive shaft angles... you could get a t case drop and some rear axle shims, BUT that might not work on a 1996+ due to the design on the rear tail shaft/housing
I would get this instead...
http://www.ironrockoffroad.com/Merc...=IROR&Product_Code=IR-X_HNT&Category_Code=XDT
then all you need is some control arms... you CAN build short arms... but it is not much more work to build long arms... and will not cost much more either...
to keep it simple you should just build radius style long arms... I would get some ruff stuff heims, either 7/8 or better yet 1.25 for the lowers and 7/8 is all you need for the uppers (and you really only need the drivers side upper)
there are many walk thrus on making a set of radius arms the hardest part will be making the frame side mounts/crossmember
finally you will need shocks... they can be had for as cheapo a $120 a set, but the SKY IS THE LIMIT