The hardest thing for me find online was learning how to recognize the different cases, and how to install a 6 cylinder case in a V8 - and whether I wanted to.
- TLDR version - scroll to the bottom for how to install a 6 cylinder tcase in a V8.
There are a variety of transfercases available for your V8 WJ. The holy grail is the NP242HD. These came behind V8s, have 2wd, and are reported to provide up to 1mpg more on the road.
The NP242HD has 2wd, AWD, 4Hi, N, and 4Lo.
The AWD on the 242HD is just like an open differential, unlike the NP247 that is likely in your Jeep now. The 247 uses clutches to manage torque between the axles. With the 242HD in AWD, you could conceivably have only one tire spinning. The '93 ZJ Grand Cherokee came out with a transfercase that only had that mode, resulting in Jeep's Trail Rated campaign - those early ZJs didn't wheel worth a darn and people sued over it.
Fortunately, the 242HD locks in 4Hi and 4Lo, so you get the conventional 50/50 power distribution between axles that you're used to.
There are some strength differences as well, with the WJ/J version rating about 560ft/lbs less than the HD version. The chart below is really helpful. And remember - NP (New Process) became NV (New Venture); so an NP242HD is the same as an NV242HD. As if this wasn't hard enough to keep straight already...
The NP242 comes in 2 flavors - the NP242HD - found in V8s, and the NP242J or NP242WJ - found in 6 cylinder WJs. The 6 cylinder NP242J will not bolt directly up to your V8 engine. Read on.
Here's an example tag for a 6 cylinder tcase, the NP242WJ.
The input snout on a 6 cylinder transfercase is short (shaft surrounded by the studs), the V8 unit is about 2x as long.
The tailshaft for the NP242J/WJ has a rubber boot. The transfercase in the pic below lost the boot a long time ago. The V8 transfercase has a metal tailcone instead of the rubber boot. Driveshafts are NOT directly interchangeable.
A bonus of the 6 cylinder case is that you can run without a rear driveshaft if something bad happens to it. Like a very poor man's SYE. :)
What follows are several recipes for installing an NP242
NP242WJ / J
Here's a great video of installing an NP242J (from a 6 cylinder) into a V8 WJ. It also covers what to do with that optional connector on the transfercase (Hint, your WJ is already wired for it!). This is also the other 6 cylinder NP242J tag you'll find out there.
The video above is great to see the differences between the shifter you have now and the Selectrac shifter.
This is purported to also work with an NP231J transfercase, which has the same gear selections as the NP242WJ/J. The chain is narrower and therefore the tcase is rated for less overall torque, but it seems to live OK behind the V8.
If you're using an NP242HD, it's a bolt-in. You need the transfercase and the rear driveshaft from the donor vehicle. Boom, done.
This is your strongest option; the 242HD case is slightly stronger than the 242WJ/J cases.