Eagle,
Thanks for the info on the pinion length, I did not know that.
As far as the ease of repair goes, I personally think pressing bearings on and off of axles is much more troublesome than having to remove the bearing from the axle tube. This has a lot to do with not owning a press anymore. Secondly, it is my understanding that the function of the inner seal on the early non c-clip D35 axles is to keep the gear oil OUT of the wheel bearings and the grease IN. There is supposed to be wheel bearing grease in the wheel bearings according to my Haynes manual. I don't own a FSM for my '87 XJ, I wish i did.
I recently replaced my CJ-7 rear axle bearings, and the FSM says to pack the bearings with grease. I know it is an AMC 20, but it is similar in construction to the D35 with the inner and outer seal. I have owned several late 40's Cj-2s, and they all had the inner/outer seal, and the bearings had to be packed with grease. I think those old willys models had a dana-spicer 23 rear axles....I am not exactly sure of the model numbers. Maybe the inner seal can be left out; I just don't know. All I do know is that is the way I was taught to do the job, and thats also what all my old Motor and Chilton manuals said to do.