The way I see it is this:
The 258 (4.2L) is in the same family as the 4.0L. With simple changes, the 258 can run rings around the 4.0L. A few tricks I've found: 4.0L head, Offy 4bbl intake, long tube headers, etc. What I've found with the carbed motors is that if you can get them to breathe, they'll make more than enough power. I've personally had problems with the 4.0L exhaust. At least in the cherokees, they seem to like cracking manifolds. I've done everything I could ever think of to fix it (new motor mounts, new tranny mount, torquing everything down, etc), and they still want to crack. Weird harmonics? There's nothing wrong with the motor, and it still does it. This car has cracked about 5 exhaust manifolds in the past 10 years, and the most offroad it sees is muddy dirt roads, so it's not a flex issue...
*EDIT* Also, the 4.2L has a thicker block and can be bored farther over than the 4.0L.
