since it's still running at all, I'd say it's safe to say you didn't hydrolock...
for a start (if you haven't already) completely remove the valve cover and SOAK it in degreaser and use various parts cleaning brushes to thoroughly clean it out... making sure to get into the baffles on the underside - they tend to clog up and make blow-by even worse than the 4.0 is already known for.
buy, borrow or rent a compression tester and check compression and leakdown on each cylinder... this will give you a good starting point to diagnose if the engine is ok or needing a full rebuild/replacement
[FONT="Comic Sans MS"][COLOR="Blue"]Sean B. - Schenectady, NY - 95 YJ, 350/700r4/NP241, JB Shorty SYE, 8.8 rear, 2" BDS, 1" homebrew shackles, Daystar 1" BL, TJ flares, 35x12.50 General Grabber AT2 on 15x10 Bart D-Truckers, Polyshield polycarbonate windshield, HD over/under crossover steering
[/COLOR] [COLOR="Red"]swap/build thread: [url]http://www.jeepforum.com/forum/f22/after-almost-4-years-finally-my-own-build-swap-thread-1542284/[/url][/COLOR][/FONT]