How bad is relative to what your planning to do with it. If your planning to DD it I think the 4.0l only gets 1 mpg less on the highway.
- For a trail rig it depends on several things. What kind of stuff your planning to run. Mud or rocks. Also what your max tires size as well as axles etc..
- I do everything different so, I'm specifically building my TJ w/ the 4cyl for a few reasons. Its a little lighter and a good bit shorter in length. I will be able to fit a triangulated 4 link up front just clearing the front of the engine.
The AX5 has a bad wrap but personally I think they are fair transmissions, they just are only good for some much wear/tear before they need a rebuild. I think a good rebuild with good bearings can help them last a good bit. I've seen/heard of many problems with them but to me its mainly loosing gears and shifting issues. Which I think a good rebuild and proper oil would correct. (when a bearing goes out it breaks other stuff). How many are truly broken ? Blown inputs or outputs, gears spit out the side etc?
All that said, I'm running a W56 up to the 2.5L so I get the benefits of the toy trans/t-case (and axles) and will be pushing 35-36s
HP- Based on my homework I've seen numbers around 140hp. I think its easy to hurt power on these engines with the wrong parts or not properly matched parts. Some recent discussion on the jeepforum about swapping 4 hole injectors (fords) in for better fuel atomization. No real improvement on max HP but reportedly helps throttle response and better MPG really do to more efficiency.
I have a goal to get 140hp. Stock is 120 so I feel its a realistic goal with intake/injection and exhaust work. I'm also gonna look in to roller top end, that's relatively cheep (only 4cyls) and can free up 5-10hp all by it self.
So all that said, if you try to run with the V8 guys you will be disappointed. If your gonna run huge tires you will be disappointed. If your rig is built in line w/ what the 4cly is capable of handling I think they are actually pretty good engines.