Some good info here. 4.0 swap into pre 87 cherokees is possible, though it requires significant fabrication. I did it to my 85. If you have a donor XJ, (rolled 93 4.0/ax-15 in my case) it is more or less a parts swap until you start messing with the radiator, wiring, and fuel system. The firewall modifications were minimal, and basically meant a big freaking dent in my experience.
I have had good experience with the Borg-Warner T-5's. The WC version found in most v-8 mustangs and all camaros/mustangs after 1988 (when they were bought out by TREMEC) is pretty strong, and will stand up to decent amounts of horsepower. I absolutely PUNISHED a non-WC T-5 removed from a 2.8 powered camaro behind a ~400 HP 355ci sbc (not dynoed, but conservative estimate) for a few YEARS before it gave up. It was in an 88 camaro that weighed 3420 with me in it. Granted I never let myself put drag radials on the car, which would have most likely ended it quicker. I am sure there are some guys doubting my HP est. now, so I guess I'll throw some specs out there. About 10:1 CR, Dart Iron Eagle heads with 230cc intake runners, 2.05" intake valves, 1.68" exh valves. Can't remember the exact cam specs, but somewhere around 280ish seat to seat duration with 1.5 full roller rockers, .570 lift solid roller, Victor JR single plane intake. According to the DYNO 2000 program it was over 500HP, but I didn't really believe that. I kinda miss that car.