This car has been completely awesome for me. Bought this Jeep after my freshman year in college, after my 1994 Rodeo decided to experience catastrophic failure in the wheel hubs, brakes, synchronizer, radiator and wiring.
The XJ was SUCH a breath of fresh air. The 4.0 I6 is a fantastic engine. Power is good, acceleration has never been an issue for me. When I drive, I normally keep the revs under 2500 to keep the gas mileage decent, although the engine pulls great from 1500 to 2500 rpm.
But that doesn't stop me from throwing the hammer down from time to time. I've granny shifted a 0-60 time of about 9 seconds down near sea level. Now I know that's nothing to brag about, but it's plenty quick for me. Just for yucks, I tried a top speed run and got to about 105 mph before I sissied out for fear of getting a ticket. I don't think it would have gone much faster though... but who needs to go that fast in a Jeep anyways? Pshhhh.
Gas mileage is about what you expect from a midsize SUV. Down in the south (Tennessee), I'd get around 15 city, 19 highway. In the high altitude mid-west (Colorado), I'd get 17-18 city and almost 22 highway. When I tow my 4x8 (loaded) box trailer across the country, I would average about 16 mpg at 65-70 mph. In theory, if I drove faster than that, the mileage goes down big time.
Inside, it rides smoother than a Wrangler TJ or CJ, but still rides like a Jeep. So when you go over a bump, you'll hear it and feel it. It is not really something that I think about though. I'm just used to it. Cabin noise is NOT bad IMO. I can easily have a conversation with a passenger and not need to raise my voice... unlike my dad's diesel pickup. The cruise control works freaking BRILLIANTLY. Air conditioning works well, but I need to recharge it about once a year. My seats are in great condition and comfy, and I have no problem sitting in them for my 1100 mile cross country drives. I wouldn't want to sit in the back seat for very long though, since it doesn't have headrests.
One of the cool things about the back seat is that the bench can be taken out completely. There's a lever you can pull, and the bench comes right out. This frees up the 8-10 inches of room directly behind the front seats, where the bench would normally be when folded down. It adds enough extra room that I can completely lay down in the back without having to lay across diagonally (I'm 5'6" BTW, taller people might not fit as nice). It also makes it easier to put my mountain bike back there, since I don't have a bike mount.
The command-trac 4wd has had absolutely zero problems. Shift on the fly is very convenient, and the shift into 4 hi is seamless. I do take it 4wheeling on occasion, and it's performed beautifully for still having stock suspension. Mine has the Upcountry Suspension group factory upgrade, so mine sits 1" higher and has added protection to the gas tank and transfer case. The transfer case protection has definitely come in handy.
Handling-wise, it's no car. You can't fly around corners in this thing and expect to stay sure-footed. But, the steering IS tight and responsive. In some cars I've driven, you can feel the road THROUGH the steering wheel. This is NOT the case with my XJ. The steering feels solid and smooth. No play either.
To say that the interior materials are top quality would be dumb. The dashboard molding that houses the stereo, climate control and gauges is pretty cheap plastic. But to me it looks fine, and therefore its OK. I don't get frisky with my dashboard so it doesn't annoy me that the plastic FEELS cheap either. The other 2 pieces that feel cheap is the turn signal lever and the housing around the window controls. The rest of the components of the interior (steering wheel, e-brake, shifter, door handles, belt buckles, seats, sissy handles, window switches etc etc) feel much more substantial IMO.
My Jeep still runs and drives strong, and I don't see why it won't last me many more years. The 4.0L I6 is one of the best engines that Chrysler put out IMO, and with proper maintenance they will run for a loooooong time.