A 2" budget boost will handle 31's & will not change the ride. All it really is, is putting spacers on top of the springs. If you go to 3.5". You will be changing out springs, shocks, lower control arms & a few other things. It will change your ride.
Having a 96 you probably have a CV style front driveshaft. If so, & you wheel it alot. Then the CV will go by-by. It should be changed to a u-jointed front/double cardan rear front driveshaft. Droping the t-case on a GC is not recommended. Power will not change that much with 31's. Adding an after market Air filter setup will bring back what power is lost. Regearing is done with 33's or higher mostly.
Here's a good link what is needed for the amount of lift you would want. Also a GREAT guy to buy from. The graf is tward the bottom. http://www.kevinsjeepparts.com/zj/zjlifts.html
ZJ 98 5.9 LTD. Lots of mods. 7" T&T's Long Arm Lift ,BFG KM2"s,35X12.50x16's,4:56's, Vanco brake upgrade, M1intake,Holley52mmTB,MikeLeach Headers,, Arb'ed HP D30,Aussie Locked rear,Procomp MX6 Shocks,Arb front,RearTR bumpers,ECT.ECT.