I think all the 2.5L were EFI, but not 100% sure. Yes, personally (and it is just that, a personal opinion) I think the 2.5L can do just fine. Jason Bunch of Tri-County gear runs a 2.5L in the rock crawling competitions... and does pretty good.
Now, if your wheeling is going to be mud boggin kinda stuff, then you might be disappointed and want more HP(4.0L) to spin (read clean) the tires...
The 4.0L is a great engine... and if I were starting over, I would try to buy a YJ with a 4.0L, but wouldn't walk from the right deal on a 2.5L. Gets us back to "Have a plan"... What is your goal? Map it out on paper.... Is it a buy the jeep and do lots of mods immediately or over time? Have a budget in mind already (its always more expensive then you plan
But less expensive if you do it right the first time around.
I can't comment on the trannys much. I've never owned a YJ, and my CJ7s T4 is LONG gone.
Have you driven any 2.5L and 4.0L YJ? Try too before you buy. Don't know where you are, but in New England there are lots of show jeeps (ie street built jeeps with 33s, chrome, etc) that have 33s and haven't been regeared. See if you can find one and drive it. Then drive one unlifted. You'll see a big difference.
Cost on regearing.. It going to vary widely, but I would guess somewhere in the 1k range (new gear sets, maybe carriers, bearings and labor). Could be more or less...
Changing axles: The Ford 8.8" out of the Explorer is a popular rear axle swapfor the YJ and is almost a bolt in. Doesn't need to be cut. Can be had with disc brakes, and cost isn't too bad. If you got lucky, you might even be able to find one with the right (lower) gear ratio and then only have to put new gears in the front to match the new rear ratio. Scout rear D44s are a good swap also. A little narrower then stock YJ, about 2" total, but nothing to worry about.
Of course the other option in all of this is: Buy the YJ (which ever engine..) lift it, new tires and wheel it. Then deal with gearing/axles/trans as you can afford to (or you break them..) If you do this... still have a plan laid out so when it happens you now whats next.
See my forsale list: