If you have need of the full-time mode and don't intend to push more than approximately 1400lb/ft of reduced torque through the drivetrain (at which point the transfer case will be the least of your worries), then go with the 242.
If neither the power output nor a pavement-capable AWD mode suits you, run the 231 and enjoy being able to put more or less 2000 reduced lb/ft of torque through the case.
A stock XJ puts out (at most) 235lb/ft of torque. Multiplying that by 2.72 (the low ratio in both the 242 and 231 cases), we end up with 639.2lb/ft as the absolute maximum either case will be expected to tolerate in stock form. This means that no stock Cherokee can put out more than about 33% to 42% of the potential torque that it's capable of handling at the transfer case.