I would suggest keeping it simple and just put a surplus GM 6.2 liter diesel in it. It would bolt right to that tranny and if you turbo it it will have plenty of power, ( I did this to one years ago and was very pleased ) and give you good fuel economy. You can often find them surplus for $1,000.00 or less. You will need to beef up the front springs but that's easy. A good thing to do is put the starter from a 6.5 in it as starter problems are usually all you have with the 6.2 and the 6.5 starter totally eliminates that. I would bet you could get everything you need for the conversion from a junkyard cheap.

Have fun and good luck

GA ,but I don't think there is room for that engine. It came w/ a 231 V-6 Buick, and there was barely enough room for that.

Look up the cumming QSB3.3 Engine. It is designed to be put into vehicles like your jeep. A friend of my sons put one in a land cruiser and is very happy with it. Cumming has several other diesels designed to be put into various vehicles.

update: Isuzu's 4cyl. from the npr series truck will work just fine and will bolt up to a GM tranny. This motor is supposed to be quieter and is widely available