I have a 1997 TJ SE that I swapped the 2.5 & 5 speed tranny for a Dodge magnum 5.2 V-8 & 44RE transmission.
I had looked at other options also and then decided to go with the V-8 since it is about the same about of work to swap in the I-6 4.0 engine.
The nice thing about doing the Dodge V-8 swap is that the computer for the V-8 mounts in the same spot as the stock Jeep one. And because it is a Mopar product the computer will talk to your stock dash. There is a ton of information about doing this swap on the internet. The other popular swap is to use a Chevy LS engine and transmission. I am not familiar with this swap so I can't offer much info. The Chevy LS V-8 engines make more power than the Dodge V-8 engines.
No matter which engine you go with you are going to have to change your transmission as the AX-5 will not work with anything except the 4 cyl. You will also have to change the input gear for your transfer case.
Chevy v8 parts are cheaper and more common as well.
You can use the Chevy PCM with the Mopar PCM which allows the use of the stock TJ instrument gauge cluster. Found a guy that can handle the wiring.
So if anyone has a 4.0L 97 or newer, I'm lookin
You will need the sensors form the jeep engine if you go this route. Dakota Digital also has an option I belive.
I went with an autometer cluster and a standalone OBD2 gauge that reads digital real time as a back up. I am running the jeep CPU and the chevy CPU. Chevy CPU is mounted under brake booster as I had a non ABS jeep. You will need wires from the jeep harness for the 4wd indicator light, NSS, and reverse lights. I would have to go back through my notes to be sure...