My first rig was an XJ. It was on 32s, and it took a substantial amount of lift to fit them. With those tiny wheel wells, I just don't think another XJ is my answer. (Are the wheel wells on a ZJ significantly larger?)
I think they are probably similar, but modern practical knowledge has changed. When I built my first ZJ, it was like 8" of lift and 33's and that was considered necessary for that tire. The purple 98 ZJ above (and below) pictured about is 4.5" and 35's with, honestly, very little cutting. The aftermarket bumpers helped there. It also got 15+ MPG highway, and I drove it all over...death valley, Moab multiple times, Silverton ETC ETC. Now people are stuffing 40's in those wheel wells somehow. You can do some trimming and still retain the stock fender lines and look.
Here are some pictures showing how little trimming the purple jeep needed (the one where it's on it's side on Green Day has the suspension unloaded, but it's a good angle of my lack of trimming). It stuffed them pretty good and only sat at 4.5". The Black one was also on 35's, but more like 5" of lift. I think it was actually a front to rear swap, with 1.75" pucks on top. 8.8 rear, 30 front 4.56's etc. It had the 4 point slow motor, so it would max out at about 60 (maybe 65 with a brisk tail wind) on the highway and get about 9 mpg. I could not recommend that motor any less. Not only was it underpowered for a rig that size, it also sucked at doing motor-like things such as running. I had almost zero problems with the 3 5.2 v8 zj's I had, and I beat the living shit out of them.
That ZJ for $500 is a steal. Put long arms on it and some TLC and you'd be in business there.
Honestly, the early WJ (1999-2002) with 4.7 v8 may not be a bad option either. I see those pop up for sale quite a bit for cheap. This one has been on KSL for a while, and might be had for cheaper. I'd take those 2" pucks out and then either keep the 37's, or go to 35's. Going lower is better still, but would require new coils all around. I think 4.5" on 35's is the sweet spot. I think wheels with more offset would be good too.
https://classifieds.ksl.com/listing/74289276