I do believe there may be a few pictures of stock xj's with both wheels and tires.
Sure you can drive your unit with 31's and your 3.07 rear if your suspension will allow it. It's not a combination you would select if you had the choice but lots of people do it on DDs and limited offroad use. Your odometer reading will also be screwy. You might look at doing a BB first however, to be sure there is no rubbing. No need to chop anything. Would recommend you do some searching before you decide. 16 year old xj's will vary so greatly in condition (mileage, saggy suspension, rust, bad shocks, etc) that a blanket statement one way or the other is not realistic. Measure your clearance as it stands now and re-evaluate. It may be time to upgrade your suspension components.