Tranny probs

I have a 89 jeep xj with all stock l6 4.0L. Recently Ive been having transmission problems.... About a wk or two ago my jeep started to shift sluggishly and would frequently slip out of gear as if it was in neutral... then when i would give it gas it would sometimes slam into gear or slowly accelerate. But now it has finally had it...while driving to work it started to surge a bit while accelerating and smoke poured out from under it...then just ceased to work...does anyone know why or could anyone know maybe how to fix this...or should i opt for a new tranny?

Hows the fluid look in it? burnt and low? Im willing to say it crapped out on you but thats a guess

Color and smell of the fluid?

My 90 XJ had a similar issue once. Went on a 500km round trip to meet a couple guys to get a spare tcase and tranny (oh the irony) and on the way home, in the middle of nowhere, in the dead of night it feels like the tranny is slipping into neutral, then catching, then slipping. I was able to nurse it to a small hick town and got a motel room for the night. (wasn't a total write off, the wife was with me )
Next morning I check things over and fluid was really low, but no signs of leakage anywhere on the outside, no smoke but still doing the same thing. i picked up some tranny fluid and dumped some in, heading home it was still doing the same thing but not as badly. Heading up a big hill all of a sudden this white smoke is billowing out from behind me. Pull over at the top and the fluid has come out the dipstick and all over the exhaust. The dipstick now shows it as waaaay overfilled. Didn't have any tranny problems on the way home after that.
Once I was home I drained the trans, fluid looked good, did a filter change although there was nothing wrong with it and haven't had a problem since - this was probably a good 20-30,000 kms ago.

I suspect that somehow the tranny fluid got 'stuck' in the torque converter which showed the low reading and poor running. Once I overfilled it the stuck fluid got blasted through and cleared the lines.

I doubt that... during normal operation the torque converter is 100% full of fluid AFAIK. It drains down a bit when the transmission sits. This, and other places the fluid drains down from, is why you check the fluid level in a transmission while it's heated up, operating, and in the proper gear (usually Park or Neutral.)