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Daily driver leave it stock. I have two XJ. 2000 in 35s rubicon long arm 5.5 lift. And a 1989 stock. My 1989 stock jeep drive so much better specially in the freeway. Plus its my daily driver now with a 40 mile commute one way. I cruise like a cadillac. My 2000 is drives more like a tank. Has bumpsteer and wanders on the road.
Somebody mentioned NEEDING long arms...I really have no clue why they mentioned that. However, I would keep it to 3.5" or under so you can try and avoid needing a SYE. A mild lift with tires and locker/lockers will make a world of difference. If you don't want to mess with having to re-gear your front and rear I would keep the tires no larger than 31". I am finishing up putting a RE 3.5" superflex kit on my 98XJ and I am very impressed with the quality of the lift parts, but I do have 33" KM2s on it. But I still plan on DDing it.
So...for you I would go with something around 3.5", because this is just the right size where you can run 31"s and it look fine or you can step it up to 33"s in the future if you so choose. I would investigate lockers if you really wanna step up but don't want to go with larger tires.
