youdidwhat wroteyour diff's will have to be re geared as well. and the ax5 will not handle the power you will need to swap to the ax15.
before you try all the swapping try some power mods first. throttle body extention, cold air intake, new computer chip,
also regearing to somthing like 4.88 or 4.56 would cut th DD aspect down and you would not be able to go as fast on the hwy. but you would have more trail power. most of the 2.5's we run in our club, do not have problems off road it's keeping up on roadf that they lack.
do you run 4low all the time on the trail or are you running 4high?
Why do you say he'll have to regear? Chances are, since it's a 4cyl, that it already has 4.10s He's talking about upgrading to a 4.0L, not upgrading his 2.5L
Personally, if he can get a donor Cherokee, I think it would be worth the time and effort to swap the whole driveline in, particularly if the Cherokee is an auto. Grab the whole computer and wiring, and figure out the ducting for the A/C.
You'll have an overdrive Auto, which if I recall correctly, the TJs only had 3spds. You'll have the bigger engine with the better gearing.
If they can stick a Hemi in a TJ, the 4.0L swap can't be too terrible. Might be time intensive, but worth it in the end, IF it's what your friend wants.
Just my $.02
Erik