do you plan on keeping your existing transmission? they arent really strong enough to stand up to the 350.
if not, consider that you will need an adapter from the new tranny to your existing xfer case. if you plan on putting in the chevy xfer case, think again, chevy's xfer cases for the front driveshaft are passenger side drop. your wrangler is gonna need a driver side drop.
as for which route to go with the chevy 350, i guess thats just up to how much you wanna spend on the conversion. if you find something in good shape, you may want to go wreck. if you go crate, your still probably gonna need a lot of other parts. unless the crate comes "turnkey," you are gonna probably still need oil pan, intake manifold, distributor, entire belt assembly for the front including alternator, balancer, PS pump, etc. also consider that you will need to buy a new radiator, new motor mounts, new exhaust, plus other things to adapt things like throttle linkage.
if you can buy an engine and rebuilt, that might be the cheapest way to go. especially if you find something for a few hundred bucks that already has intake, carb, etc.
if you have more questions, feel free to ask. i am not an expert, but i have done a lot of research, and have just started doing a similar conversion into an 87 wrangler.