"I have a 99 xj (auto)and I am going for a 3" suspension lift so I can run 31" BFG's.I do light 4 wheeling and I am on the highway alot so I prefer a smooth ride.I can only spend about 500-600."
Laredo -
I've got a '99 and kind of did the same thing your looking to do. I drive from NH to Framingham MA everyday, so highway ride was really important.
I did a mutt lift on mine that seems to work well. I installed the RE full length AAL, but removed the second stock spring (essentially replaced on spring with the other). I added Rocky Road 1 1/2" lift shackles and their1 1/2" coil spacers to the front. I'm sitting at 19 1/2" in the front and 20" in the rear. I needed a 1" Rusty's T-case drop and used 2.5* shims in the rear. I'm using their BPE's all around with stock shocks, but will replace those with slightly longer shocks later this fall.
The bottom line is the Jeep is smooth on the highway - no vibes at all. I spent well under your $500 budget, and I can fit 30" tires. Plus, I can use most of this stuff later when the Jeep's more of a fun rig and less of a commuter.
Opinions on here will differ, but I wouldn't put 31's on my jeep without regearing the speedo and regearing the driveline. Then, why spend the time & effort on regearing a D-35, let's put in a D 44. While I'm installing the D 44 I might as well put disc brakes on it.... and so the money pit begins.
Good luck