Do you have a body lift on the Jeep? I've read that the lift can cause the shofter to hit the body.
We had the same problem with 2nd gear and reverse. Read that the 3550's are prone to this. Ended up swapping in a rebuilt for $825. We had to hold it in 2nd forcefully to keep from popping out - mainly on deceleration. Drove it that way till ready to make the swap. I had looked into rebuilding it myself, but after reading a couple of write ups on here about how fun that is, plus considering a rebuild kit can easily run $400 (or more if you need any gears), went with a rebuilt.
Yellow Jeep Club Member #√(-1)