i've done this swap in a 2000 XJ. trust me, the question of 'late vs. early' models is a non-issue. late model 242s are ONLY for '96+ XJs. you need an early model. you can adapt one to the other, but do you really want to get involved in a big retrofit. just get the right one in the first place and save yourself the headaches.
yes, a major reason is the speedo will not work. use the shifter linkage from the donor vehicle, and it will work fine. if you are doing the tom woods sye (which i did), do a rebuild of the 242 tc at thsame time (which i also did), since you already have it open.
whether or not to do the swap is completely dependent on your use of the vehicle. if you are trail-only, by all means stay with the 231. if your XJ is your dd, don't listen to the 242 naysayers. yes, the 231 will take more abuse on the trail, but the 242 is quite capable on the trails. for a dd, the full-time 4wd option is excellent for wet roads and when snow is patchy. it was well worth the cost and effort for me.