Bummer TOZOVR, I´ve been lucky, drowned a few. Learned a long time ago, not to try and start them in the water, until I check things out some. When in doubt, pull some plugs and see what comes out (before trying the starter). Much of the damage I´ve seen, done by hydrolock, was done by the starter, more torque than you´d think. The worst damage, I´ve managed, was a valve that looked like an inside out mushroom, that was a close one.
Reading your posts, is making me want to figure out someplace else to get my air from, quick. I´m still running the stock box, on my new to me 88 XJ. Only a matter of time before I baptize this one also.
Was the starter (tech. inspector) for a local, mud pit for a decade. Saw what worked and what didn´t and what kind of worked. The K&N worked better than the paper, in a stock box, most any kind of open filter was a no go. Drawing air trom the rear of the air box was better, drawing air from the top of the motor, center by the firewall was better yet, drawing air from the passengers compartment, was almost fool proof (worked well for CJ, YJ). Guess a snorkle is the best solution (for the XJ). but I really dont want to do that to my XJ. Ran a roof mounted canister (tractor filter) when I lived in the desert, kind of a snorkle.
Most of the wear I´ve seen in the 4.0 has been, cheap oil or years between oil changes (neglect). Pulled the head off of a 4.0 with a 150,000 miles, most of it´s life with a K&N, had worn mains (run a little to hard on the interstate), but very little ridge, which would probably be a tip off for filter related wear. Ran synthetic oil most of it´s life, with bi-yearly changes.
I personally think, frequent oil changes are more important than a few microns of filtration.