Wait, is there a driveline that I could just swap in complete from motor to t-case, into the XJ? Chev is all drivers drop right? I've seen hints of other guys just dropping the whole lot in and not worrying about adapting bellhousings/tcases... Is this a simpler route?
I think chevys are all passenger side drop. Frankz used a hybrid 241 t/c if I remember correctly. Using some sort of hybrid transfer case makes sense. I bought the adapter to connect to my np242 to the 4l65 but either way you will need to do something. I would definitely suggest using the v8 transmission (from whatever you end up getting) rather than trying to adapt either an aw4 or ax-15.
1. From what I understand, the lower profile LS intake can be bolted on, but there are some issues with bracketry. Who knows what needs to be done to get the LS intake installed, and will it negatively impact performance/economy?
You either need a new water pump and spacers, a new water pump and all new accessory brackets w/accessories, or if you have a cable throttle body you might be lucky enough to just mess with the water pump outlet a bit. On that note, what you would want is the LS6 intake. The LS1 intake is the worst flowing GenIII intake and will net you power loss all the way across the power band. With the LS6 you would need to reprogram for the higher flowing LS6 injectors or make a rail adapter to run the truck injectors. You also still need to modify the alternator bracket to bring it down far enough to clear the hood.
2. Is there any way to get an AC pump mated to the LM, and still under the hood? (OBA pump)
Yes. I have my stock 1996 XJ compressor under the hood. It just takes pretty basic and easy to make custom brackets (it lines up pretty close just straight off the water pump bracket bolt holes for some other accessory bracket that I didnt use)
3. Fuel delivery... I'm not sure which Jeep I'd be doing the swap in. Either a 98 or an 88. What fuel delivery options do I have for either? Can the 98 in tank pump be modified to push the regulated 60psi, or does it make more sense to just modify the pump for no pressure regulation, and regulate at the rail and install a return line? Or should I do like FrankZ and just drop in a chevy pump into the XJ tank?
You can run the engine of the stock pump and 50 PSI for the 98 (returnless in 98 right?), though it wont be capable of supporting the full power of the engine. The 88 is return style right? If you you might not need to do anything since the pump is probably capable of supporting the flow needed. For the 98, my suggestion would be to replace the pump and run an external regulator and return.
4. FrankZ talked about putting the chevy cluster into the dash but I don't think it ever got finished. Anyone know more on this?
I dont suggest that, nobody seems to be successful at it. Im running my stock 1996 dash with all gauges (its a gauge cluster not idiot light style) working except tach which I just havent got around to. The 98 cluster would be the same if its gauge style like mine (pretty easy) or you would need to put all new gauges in if its idiot light style since there obviously arent gauges. The 88 would be easy for all the gauges except you would need an adapter for the speedo since the trans has electronic speed reading and an 88 is cable style I believe.
6. 4L65E or AX15? I prefer manual, but that's probably just because I'm used to having a wimpy motor. I've never driven an auto that was mated to a power plant making more than 150hp

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4l65e. Definitely not AX-15. If youre wanting manual, do an nv4500.
7. I've heard the water pump needs to be spaced out.... is that only with the LS intake?
Just for LS. Truck accessories are spaced out about 1.5" further than corvette accessories. F body (camaro, firebird) are spaced out 0.75" more than corvette accessories.
6. What 5.3L's are going to be the easiest swap?
They are basically all the same. Some are better than others (the L33 is the best gen III 5.3 since it has aluminum block and flat top pistons for higher compression). For ease the only real difference is going to be stuff like does it have an EGR (most 2002+ dont) and does it have electronic throttle body (most 2003+ do). Personally having owned a few cars with electronic throttle body I wasnt afraid of that so I got an 04 engine. The E-throttle body makes the swap a tiny bit easier I think and in my opinion EGR is to be avoided like the plague.