Ditto on Chrysler 8.25 swap as being an easy swap/upgrade from the D35, but you may also end up with needing to replace brakes,bearings, drive shaft u-joints, etc. So what may start as a budget swap can rapidly become something else.....I know first hand.

As NW99XJ said, you can also rebuild what you have, I know the JY's here are proud of their XJ parts.