just throwing my $.02 into the thread...
i too have long thought diesel powered XJ would be great!
i read a blog a long time ago about a VW jetta mid-80's engine going into a ZJ, seemed mostly straightforward and not terribly different than the OP's idea.
some things i would consider:
first, would you be able to pass any inspection for your state? would i ever move to a state that has inspection that would potentially not allow it? i live in TX, and diesels here only require a basic safety inspection, and have a different tax rate for registration of the vehicle (my wife's car is a TDI passat, and i had a ram CTD before my XJ) so what would be the considerations? could i somehow get the registration changed? obviously 'at the inspection station' the inspector would say 'yeah it's a diesel now' and probably give me a sticker, but what about when i went to get tags/registration? that office is pretty tough on whether or not your inspection papers are legit. anyways, just some thoughts on that matter.
secondly, motor choice! is the 300D engine mentioned above going to deliver 'real-world' performance similar to what it does in it's original chassis? one on hand i would say yes, and another no. say if you do a minimal JY/BB (ZJ V8 coils and BP rear for about 2" lift) and the oil pan adequately clears i would argue you'd get close to the same MPG/perf numbers seen in the original car, however i'd argue it would 'feel' grossly underpowered compared to the 4.0L. even more so for going with +3" lift/+30" tires (even considering appropriate re-gear) it would likely feel wayy underpowered.
what about that isuzu NPR diesel commonly found in box vans? i don't know enough about them to say much. if the engine/associated hardware has a decent power/weight ratio and appropriate physical dimensions it could be a good choice.
and onto the 4BT: it's a 6BT less two cylinders, which unfortunately means even though it's slightly smaller end to end, it still weighs twice as much as the 4.0L removed, not to mention the top to bottom size difference...it's HUGE and HEAVY.
i would recommend reading the various links and articles found here: Novak Conversions - General Engine Conversion Options
weights and physical dimensions considered, the novak articles make a sound argument in favor of the LS1 GM V8 against pretty much anything else for mileage/efficiency
Oh yes. Totally agreed; the GM LS(x) series engines are amazing. Probably one of the best swaps one could perform on several vehicle types (240sx/Drifting, jeep, off-road, sand-rails, etc.etc) BUT, the main issue with those engines are the price tag. Not very affordable, unless you happen across one on craigslist or something.
Another argument against the LS(x) V8; with the Mercedes-Benz diesel, I can run BioDiesel, which anyone can effectively produce significantly cheaper than the regular petrol that the GM LS(x) v8 would use. One could also run WVO with an appropriate kit installed; WVO or waste-vegetable-oil is what restaurants just throw away, or pay someone to dispose of. They'd be more than happy to let you get it off their hands. BioDiesel, if properly produced, is much better for your engine and will actually increase its longevity and help it run better. Diesel fuel sold here in the USA is of poor quality when compared to European diesel fuel and BioDiesel.
Passing emissions is no big deal here in NC; all you must pass is a safety inspection for vehicles made 1995 or older. If the vehicle requires an emissions inspection in stock form in your given state then it may require additional work and may not be a good candidate for a diesel swap.
I really don't see any need to change the title or registration. Seems like an unneeded hassle. Here in NC, people regularly swap diesel engines into Suzuki Samurais without any difficulty; they do not alter the title or registration at all. It would be the same process with the jeep. As long as it doesn't require an emissions check (sniffer or where they hook into your OBD port/on-board computer) you will not have any issues passing. As for the DMV in TX, if you do not mention that it runs on diesel, they’ll probably never know the difference (unless they are extremely anal and search the vehicle top to bottom). Here in NC, DMV officials/office personnel who handle the tag, title, and registration processing do not come in contact with the vehicle; the only people who come into contact with your vehicle are those who work at the inspection station/service station at which you get your vehicle inspected.
For early wranglers (4.2L powered) the OM617 is an upgrade in power and torque (but you must swap the Peugeot trans for an AX-15).
For any 4cyl powered Jeep, it is well superior to the stock 2.5.
For any 4.0 Powered Jeep the OM617 provides performance much like the original factory equipped 4.0 I-6. The Diesels horsepower output is a bit less (125hp) but the torque output is about the same (188ft/lb). Also, the Diesels torque curve is much better suited to trails; its peak torque comes in at low RPM, making it desirable for rock crawling and trail applications. Also, one can crank up the performance of the diesel by removing the rack limiter. If you add an intercooler, you will see a significant gain there as well. People have already breached the 300HP mark with these engines. Most only use a performance injector pump and elements paired with a few other external upgrades (no tearing into the engine is necessary) Toss on a larger turbo and you will also see a decent increase in output numbers.
People that have completed this swap report fuel consumption digits from the high teens to the low to mid 20's. Pair the fuel consumption to the low cost of BioDiesel and there is a clear and definite savings in fuel cost.
Most importantly, you can complete this swap for less the cost of a lower mileage LS(x) series engine if you do the work yourself. I know this because I’ve done the math.
Anyhow, hope you find my comments beneficial!