From a pure gear ratio standpoint the 5.38’s match well with a 35” tire behind the 42rle with that tall 0.69:1 overdrive ratio. The 4.0 likes to run in the 2500-3000 range at freeway speeds. Listen to Jerry, speaking from real world knowledge is always better than listening to somebody that makes assumptions. If you plan to wheel it hard you have one other factor to consider and that is gear mesh. The lower the gear ratio the less gear mesh you will have, that’s just the physics of a ring and pinion gearset. Everything else being equal, the 4.88 gears are stronger than 5.38’s because they have more gear surface touching. My rear end builder prefers not to use anything lower than 4.88 in a Dana 44. For 5.38’s you might want to step up to a Dana 60 or something else with a larger diameter gearset. We run 4.88’s in my sister’s TJ rolling on 33” rubber. I was hesitant to go that low with the relatively short tires but it actually does extremely well on the highway. At 80mph GPS on the way to the Rubicon last month she was still turning less than 3000 rpms. Generally too fast to ever drive a lifted TJ but I wanted to see where things went.