i don't know where you guys are finding these rigs, but i recently bought a '96 5.2 laredo w/225k for $1400.
Interior is super clean and nice (cloth), body is fairly straight (some minor hail), and ran good - for about 2 weeks, then the engine went. $850 later, I have a used 5.2 w/130k.
I had searched CL multi-times daily for months, and this was the best rig I could find. They are just getting harder and harder to get. Cash 4 clunkers depleted a lot of nice ZJs and I've noticed prices higher this year, than last.
OP, the rig sounds a bit on the high end. I would say $1100 is a fair deal. Don't worry too much about the rear end if that's what it is.. Not sure how much a used one is there, but here in CO, a JY rear end complete is $100.
'97 XJ Country, 3" hybrid, 245/75 MTR, TJ Moabs, Front Truetrac/Rear Aussie, 4:10 gears, skids, recovery.