Leap of faith

Hey ya'all,
Finally found the clean 2000 XJ I've been looking for. A dark blue Classic, stock and unmollested, low milage in cherry condition. Now for the fun part. The steering wanders and the rear end sags a little. It'll be a DD on the mean streets of L. A. with mild and enthusiastic jaunts on trails with the kids on the weekends. I'm thinking of OME springs and leafs, new bushings and an OME steering stabalizer. I have Yokohama Geolander AT/II on my Suburban and think very highly of them.
Here are my questions:
1. What's the largest size tire I can fit with no problems? I've got 16" rims.
2. Do I need a new sway bar? Adjustable?
3. Do I need to lower the Xfer case?

4. Any and all advice is greatly appreciated.

I've had 3 jeeps in the past, but it's been a while. Can't wait to get back into it.

Thanks

Steering wander can be caused by worn tie rod ends and/or worn ball joints, but in XJs is usually (???) the track bar -- not the sway bar. Unless you're going to lift more than 3" do not buy an adjustable. Many of them won't adjust short enough for that height. Rusty's will, but at stock height the bar is in constant contact with the front diff cover. At 4" it clears, but at 2" I would be concerned that under some conditions the bar would hit the diff cover.

Oh, yeah -- steering wander can also be caused by incorrect steering alignment, too.

I've got 16" wheels on my Classic, running a 2" lift. Tire size is 255/70/16, which is just over 30" tall. They would work fine on the OME kit, or maybe a 265/70/16, which is just under 31". 265's are stock on newer Tacomas, Xterras, Durangos.

Some aggressive 235s will be a great size tire if you're only lifting 2"