Thanks for this post. Just joined up to add any help i can. Recently picked up my 1998 cherokee 2 door sport, and got the real gauges off of eBay to replace those pointless IDIOT LIGHT gauges. i think i had a faulty oil sending unit before (would read on and off when it wanted to), and when i put the new gauges in, all worked except for the oil pressure gauge.
a purchase of a new sender unit ($30.99 at advance auto), gauges are 100% working. just to add a note: on my 1998 cherokee, the oil sender switch is located to the right of the distributor (looking down from the passenger side of the jeep), and it screws straight down into the block. i guess chysler moved it from above the filter for obvious reasons. the replacment is fairly easy. the sensor is easy to see, a bit of a pain to get to with the a/c compressor and lines being somewhat in the way. the socket will help a 1000 times, but you can do the job without it. took me 15 minutes start to finish.
that plastic sensor is garbage, though...the old one broke when i was just trying to unsnap the electrical plug (yep, i removed the red slide lock first). worked out for me, though...i was able to put a 1 1/16 socket on the part that screwed in, and took it out quick. not sure i would have been able to do that with just the open end wrenches i had.