The AW4 was designed for high performance auto and light truck applications - you'll find it in the Celica (NA I6,) Supra (TC I6,) RWD Toyota Van, Toyota Pickup, and some Lexus - in addition to the XJ, MJ, 1993.5 ZJ, and (I think) TJ and YJ before its replacement with the 4xRx Chrysler slushbox (a step downwards.)
I've worked on plenty of slushboxes, and the AW4 is probably the simplest (barring the old GM Powerglide.) Durability? Yeah, you can do better - A727, THM350, THM400, C6, iron Powerglide - but you'll lose the overdrive unless you install it separately (Saturn or Warn "gear splitter",) and the gear ratios could be better. And, you'd have to find ported vacuum for the vacuum modulator
THM700R4? Also the 4L60/4L65 (for your swap, avoid the 4L60-E/4L65-E - there are electronic controls you'd have to bring over,) but there are caveats there as well:
1) Avoid 1987-earlier THM700R4. It has a fatal flaw (I don't recall what it was, exactly) that makes it slightly less useful than a boat anchor. It's guaranteed to fail, and it won't stay fixed for long. Most owners of S-10s and F-bodys that I've known end up swapping in a later unit, and alles gut. Fortunately, I've managed to save them a few bucks in telling them before the get it fixed five or six times - most shops won't tell you about it!
2) The AW4 is often compared favourably to the THM700R4 anyhow. While the THM700R4 is usually given a GVWR of about 5000-5500#, and the later versions 6000-6500 (4L60 = 6000#, 4L65 = 6500#,) the AW4 is very conservatively rated. The one in my 87 went through loads of abuse (read: towing) with naught but regular fluid changes, and the only reason I eventually had trouble with it was because the bellhousing-to-engine screws worked loose - at ~240Kmiles - and the front planetary assembly ended up tilted and jammed in the case - I needed a Sawzall to take it apart. Clutches? About .0015" thinner than new clutches (I checked.) No glazing on friction or steels. Very little varnish buildup in the valve body (not pristine, but it didn't take much effort to clean it.)
3) Simplicity. While just about every automatic transmission will tell you you need "special tools" to take it to bits (they often do,) the AW4 has the advantage of needing "special tools" that I was able to make from material I had lying about with minimal expense and effort - the only thing I really had to go buy was a pair of #4-40 setscrews, about 3/4" long, for "large snapring chopsticks." I already had some 3/8" aluminum round rod stock that I used for the body of the tool. The special bridge pullers I made from shop stock - using a 1/2"-20x4" full length thread screw, some M8-1.25 and M-10-1.5 threaded rod segments, and some 1"x.5" bar stock I had lying about (I keep a lot of strange stuff around. My wife has long since quit asking me why.) The 'boxes I mentioned earlier - A727, THM350/400, C6, PG - I ended up having to buy tools for those, because I couldn't fab up suitable substitutes in a hurry. Yes, the AW4 doesn't get good marks from the field for a full overhaul (while it's simple in construction, I don't recommend it for a first effort,) it's not technically difficult - just exacting. Practise on a THM350 or C6 first.
Yes, there aren't a lot of "performance internals" available for it. No, you don't really need them, unless you're doing something exotic (like a stroker with a full atmosphere of boost shoved into it - in which case, I'd adapt a Muncie SM465 or find an NV4500 or 5600 instead. I prefer having only one clutch for high-powered applications.) But, since it's got more Toyota apps than Jeep apps, you can dig around and find what you need (just expect to spend more on that than you would the more common 'boxes.) But, it's easier to build up a stock AW4 to handle the same load you'd be able to put through a "built" THM700R4, I think.
If you're really worried about gear ratios, consider a "gear splitter" box (goes between the transmission and transfer case) and install a manual control setup (like what BrettM has. Do please be patient with him - he builds to order, and he's also been trying to hammer out some major comms problems with his email.) That would give you a much better low gear range than you could get out of a THM700R4 with less work anyhow. You'd still need to get driveshafts made, but don't you have to do that with the 700 anyhow?
Probably the only case where I could honestly endorse a THM700R4 going into an XJ/MJ would be where you were replacing a 1984-1986 2.8L drivetrain (with the "special case" A904 - Chrysler 'box with a GM bell pattern,) where I usually suggest just grabbing the entire donor drivetrain - fan to transfer case - out of an S-series 3.1L/3.4L and dropping that in. That would allow you to pick up overdrive, a better engine, and the difference in gear ratios between the THM700R4 and the A904 is more significant. I don't consider the THM700R4 an "upgrade" from the AW4 - properly maintained.
Bear in mind that you can "drop-in" an AW4 from up to about a 1996XJ (IIRC, the speed sensor changed for 1997) if you bring the transfer case along for the ride. Document the donor swap in your vehicle notebook (you should have one!) so you don't lose track of what's going on, but the control setup, I believe, is the same - and the case didn't change in length or mounting. Before you do the swap, clean out the valve body in the donor 'box and put it back together - you shouldn't need to even touch the planetaries or the clutch packs. You can tear down the old 'box if you like, to see how it all goes together (the AW4 is a "front loader" - everything gets pushed in from the front. Remove the front pump, and you have access to everything one step at a time.)
Once you've cleaned up and installed the replacement gearbox, just keep the fluid changes regular and it will last you a good long while!
