Take the rear sway bar and put it in the trash can where it belongs.
As for the rear get some sway bar disconnects, or make some. It will deffentally help you out on the trail.
Personally Im too lazy to connect my sway bars unless it gets really windy out, my XJ handles just fine w/ out them with 8" with really soft suspension even at 80 mph.
:lecture:
"The issue isn't in handling in planned maneuvers, it's when you have to make an emergency maneuver that it really counts."
I highly recommend and also practicing trying to be prepared for any emergency your vehicle may offer you whether on-road, off-road, or otherwise.
A sway bar, kind of like a seatbelt, is a kind of "insurance" for things going wrong. Same as air bags. You don't "need" seat belts, air bags, and sway bars in planned driving, but all of these devices definitely help when things go wrong. Crimson316 almost rolled his XJ when he was driving his XJ with the front sway disconnected and the rear removed.
A sway bar is a giant torsion spring that helps to transfer the weight of the vehicle from the outside of a turn to the inside of the turn by having another secondary connection to the body of the vehicle. This connection point does have a pivot point to allow the shocks to absorb bumps, but does limit each shock's independent travel distance. The result of this is a slightly rougher, but more stable, ride.
As for the handling differences with the front/rear sway bar removed, this is kind of a two-part question:
Rear - With the rear sway bar disconnected, I have felt a little more pitch in my XJ than I felt before while attempting the same maneuvers. I felt that these were well inside the vehicle's handling capability and I have also had to swerve around a car in an emergency situation. I was moving about 45mph and changed lanes in less than 50 feet. Besides the added flex, I have also had better handling on ice/snow with the rear sway removed. The vehicle's sway bar affects oversteer/understeer. With the rear swaybar removed, the vehicle has much more understeer in the back making it harder to have the back end break free from the ground in turns.
Front - I drove with my front sway disconnected while going to work one time to test the handling difference. I will never do this again as the vehicle pitched quite a bit even around curves that I was handling at the speed limit (and even the recommended speeds posted on the lower part of those "obstacle" signs). I felt that this was an unsafe pitch to be handling the vehicle with and as such I have set my personal sway bar disconnected speed limit to be 30mph, and not any faster.
:lecture: off.
My recommendation comes down to this: Be educated in your decision.