Yes and no, It may work for sometime but the problem is the drive shaft you have is probably a CV style or (prop-shaft) front drive shaft,which was used in the v-8's grands . this drive shaft is factory set in length and will not tolerate the change in length required due to the lift . Not as well as the standard U-joint /slip yoke style that the 4.0s came with. at 3.5" you will be pushing it .
As far as will it mate to the 242 transfer case, Yes, All the drive shaft and transfer case combos are inter changeable, meaning the U-joint mate at the transfer case end of the driveshaft is the same size and style with all the combinations. 249,242,231 to CV or U-joint style
A good number of us on here that lifted the v-8 grands have have ditched that cv style and went with the yoke at the diff set up.
Jeep Forum member since 2/2002
5Nine=No replacement for Displacement