Don't throw in the towell.
Generally you should have a 10-15 degree drop in temp thru the radiator from inlet to outlet. I haven't checked Cherokees but it may have to be hot enough for the fan clutch to lock and e-fan to kick on to see delta t.
Have someone hold the rps at high idle and watch to see if the lower hose collapses, I have seen this problem.
I don't know if a combustion leak in the 4.0 would show as high temp or would just show as low coolant level as have seen it on other engines as combustion gasses displace coolant. I would try a pressure test on the radiator up to 18 psi, engine off and see it the pressure holds steady. If it holds check for a combustion leak. Install the tester on the filler neck but do not pump up. Start the engine and if pressure quickly builds you have a combustion leak, don't let the pressure exceed 18 psi to prevent damage. If there is no immediate pressure increase- pump up to 12 psi and watch the needle. If it bounces/ vibrates there is a combustion leak. You can isolate leak by shorting each spark plug untill the gauge stops / decreases vibration.
Best of luck- Charles