Flat towing a 3500 pound Jeep isn't an issue for that truck. In WA, any trailers over 3000 pounds are required to have brakes, but anything under that and they figure the truck's brakes are sufficient. Unless your jeep is porky, you should be fine for occasional towing - just use your head like it sounds like you did.
The steering slop should be an easy fix, depending on what is causing it.
Get a buddy to turn the wheel back and forth with the engine off while you look around under the front end. I'd be willing to bet that if it's got the same Saginaw type steering box that Dodge used, the gears internally have worn enough to allow slop. That's fixed by adjusting the lash. There should be a hex key adjuster on the top side with a jam nut locking it in place. Loosen the nut, tighten the hex key, and tighten the nut back down. You need to do this in very small increments - if you get it too tight it will wear faster and your steering will be really tight, causing the steering wheel to fail to return to center without you steering it.
Also look for slop at the tie rod ends and ball joints. Look at the ends of the drag link and tie rods when your buddy is working the wheel back and forth - is there slop? Are the tie rod ends moving in relation to the knuckles? You may need to replace them.
That 4.9 liter 6 isn't a racehorse, but it's a hell of a good motor. A buddy of mine got 400k out of his in a 1970s 1/2 ton and it was still running (albeit with very little compression, but it ran). They're torqey as all hell so they're great for towing as long as you aren't in a hurry.