Stu, the vibration problem with the new transfer case output is bad enough that the factory issued a transfer case drop kit for vehicles with Up Country suspension. I refuse to put that in my 2000. I have purchased an SYE and I'll install it when I can afford the new driveshaft to go with it. In the meanwhile I drive that XJ as little as possible.
Dave, the service advisor at Bradshaw Jeep, has (or had -- I think they still have it) a '99 with Up Country for his wife. He put in the factory drop kit, and he said it took out about 80% of the vibrations. The problem is, taking out "most" of the vibrations may reduce it to where most people won't notice it, but the vibration is still chewing up your output shaft bearing and u-joints. Remember, that factory kit took out 80% of the vibes from a 1" lift. You want to lift 3". Yeah, the drop kit may help you somewhat, but I would be irresponsible if I didn't recommend that you start saving for the SYE.