Not sure on the 4.0L, most distributors have bushings (NOT bearings) to support the shaft as it spins. There isn't a lot of load on it, since it just spins the rotor and what ever sensor/trigger is needed for the ignition/engine control, plus its spins at 1/2 speed of the crank. I think its lubed on assembly and that lasts the life of the motor, usually. I don't think any splash oil is suppose to go up into the distributor.
The distributor is suppose to stay dry inside, any fluid that can conduct electricity gets up in the cap/rotor area, it will short the spark voltage and cause poor performance or stalling out. Don't know about oil, but we all know what happens when water gets in there. WD-40 is a NON-Conductive oil, people have actually used that to get a motor with a wet distributor to actually get running again, spray it into the cap and it will displace the water and get you back on the road.
But if dirt gets into bushing or it wears, I guess it can create some noise. Other than finding the bushings or rebuild kit and rebuilding the distributor itself, you'll have to get another distributor to fix this.
A '99 4.0L will use the Chrysler PCM that uses the CPS to trigger ignition, that is where the precision is at, NOT the distributor, its just "distributing" the spark to the different spark plugs. So in this case, a junkyard distributor will probably perform just as well, so that's a cheaper option.
Yes, the later distributors have a sensor, its a cam position sensor. The Cam Pos Sensor just serves to let the PCM know if the #1 cylinder is on the intake or exhaust stroke. The crank spins twice for every time all cylinders to fire, the cam only spins once. So, how does the PCM know if the crank on its 1st revolution of the cycle or 2nd? The cam position sensor tells it. The cam position sensor can be off 89° and it would still tell the PCM the correct information that it needs, i.e. is #1 cylinder on the intake or exhaust stroke. Take a look at it sometime its a metal 1/2 cylinder that spins around a magnetic sensor.
