Before you go and drop the bucks on a SYE that you
may not need, lift it first and see what happens. No two Jeep's are the same....each reacts differently to lifts. On my 99 with the AW4/NP242 Selec-trac/8.25 set up, I got some lovely little vibes and some noises I never thought a driveshaft u-joint could make after lifting it 3 inches. A simple 1" tcase drop has eliminated the u-joint noise, and just about completely eliminated the vibes. The 97+ XJ's are quite picky about lifts. Some people lift em 6-7" with no SYE and no tcase drop and have zero problems. Others, like myself, run into issues with simple 2-3" budget boosts. However, if you decide to go the SYE route, search on here as there is a fairly cheap and reliable method that can be done for the NP242. It involves the RE hack and tap, with a $50 Napa adaptor, that would allow you to use a front driveshaft from an XJ as the rear drive shaft. Search for "SYE" or "Slip Yoke Eliminator" and you'll see all the information you could ever want to see right before your eyes
As for major differences, and to kinda clarify what others have mentioned:
99+ 4.0's got a bigger intake, which supposedly boosts performance just a tad. Personally, I havent really noticed a difference....but that might just be me.
2000+ 4.0's went to a coil ignition system, vs. the old distributor type ignition. Again, personally, I prefer the distributor type....just about anybody can work on it....all it takes is a little common sense.
2000 will have the Low Pinion Dana 30 front axle...but this is really only an issue if you're planning on running a MUCH bigger size lift/tire combo. At 3", I would assume you're planning 31's? If so, you should be just fine.
Definitely watch the cylinder head cracking. The heads were changed in 2000, and as mentioned, you'll want to look for the head casting 0331. This can be found on the drivers side, top of the head....right below the valve cover. While some have had theirs go well past 200K with zero issues, many have had problems with their's in the 60-70K range. The more I read about it, the more i'm inclined to think that it was more or less a "bad batch" of them, and not all are bad. They are however, much more prone to cracking than the heads used on the other years of the XJ.