Personally, I think any lift over 4.5" on an XJ needs long arms. I say this because i have around 6.5" lift on my xj and short arms and hate it. Thats why i'm in the process of building some long arms and brackets.
You can go with 8" coils but check what the spring rate on them would be. Usually that tall have hard spring rates compared to 6.5" coils. Spacers would be a cheaper way out in the front. For the rear, i'd try to stay away from blocks if you can. They tend to give you more axle wrap with the added leverage on the axle. If you don't already have drop shackles i'd go that way.