I am just finishing up my coilovers up front. to expand on mad maxj's very prolific answer
here's some more information.
Budget about $400-425 per corner for remote resevoir shocks. I scored a deal on some 14x2" sway a way's that were used for one season on a buggy. Used CO's from jeep guys typically are in pretty good shape. I don't know whether I would buy used from a desert racer, though.
Hoops are tied into the frame rail right on top of the engine mounts. This is the thickest metal on the XJ and a great place to mount the hoops. You will need to ditch your stock air box. Go with a turbo city tube (or make your own) that moves a small K&N to the passenger side near the tranny dipstick. You will need to mount the hoop on the drivers side at a 45* angle to clear the master cylinder. I did the passenger side the same way. The overflow bottle needs to be moved (moving mine to where my stock air box was for now). The fuse box on my 97 needed to be moved a bit. I am tieing in two braces for the hoops that will be welded to the inner fender flares. I found some cool poly clamps that Parker makes so I can do the over engine brace.
My co's mount to the top of my inner knuckle via shock tabs.
I sit at about 8". I have about 5.25" of uptraveland the rest droop . In retrospect, I could have run 16x2" COs without going up thru the hood, but 14" travel is fine. I am a firm believer that more droop beyond a certain point doesn't get you any more traction as you unweight that tire. I bought my CO's with 200#/250# coils. We'll see how they do. Good CO's vendors will swap you out coils to dial in the rates as long as the coils are resaleable.
I am running a sway bar that is similiar to the Currie Anti-rock. Haven't mounted it yet, but I will.
As soon as I get a hosting site for pics, I will do a write up here.