I've got a 1988 WAG that is the same way. The T Case Selector (the lever that get's you to 4-LO is REALLY TOUGH to move. My 4 Wheel guy says that they are all that way, but you can get it there with a lot of muscle or a linkage adjustment.
The 4WD switch on the dash is vaccum operated and you are in 4HI if the light is on. The lever controls 4LO, which unless you are in a very difficult OFF-ROAD situation you shouldn't use.
Hope this helps!
1997 TJ Sport Custom Moss Green Pearl Coat, w/ARB Lift, Edelbrock IAS, IPF Lights, Tomken Rocker Skids, BFG 31x10.50's on Grizzlys.