I have a similar set up on MY 96 xj. I have a 3" lift with AAL. Up front I have 1" Spacer, 3/4" poly spacer and factory isolater, in rear I have 1.5" shackles, rear is sagging to 4". I have a 1" Drop. They are not hard at all to install, the only hard part is getting the Stud out. The T-Case cross member is held in place by a bolt, and a nut on a stud on each side. The bolt is no problem, just a longer replacement, the stud you have to unscrew out, easier said then done, mine is still in, and replace it with another bolt. I would reccomend spending a couple extra dollars and using grade 8 bolts, probably an over kill but I feel better that way.
Whatever you do stay away from blocks unless it is a VERY small block, 1" or less. If you are set on blocks and going up to 5" rear, I would use a 1" block and an extended shackle.