So checking my garaged, 98 xj's rear shaft this morning for U joint play, push up on the shaft in the middle and it flexes noticeably. It's only maybe 3 feet long. Shaft is just coated with flaking rust, worst than coated even,... it is rust.
Is this a catastrophe waiting to happen?

 

What do you mean by "push up on the shaft in the middle and it flexes" specifically? Is the shaft itself bending/flexing or are you getting movement in the output shaft of the x-fer/tranny or at the axle yoke?

I had a couple rear shafts in my TJ (it was the super short D44 shaft) and rust on my 95 XJ and have never had a problem. Is yours rusted beyond just surface rust? The rear shafts seem like pretty solid suckers, so I think it would take a ridiculous amount of rust to reach the point of failure.
It may be something where the shaft isn't perfectly balanced, but I have some damage (a chunk out of one of the ears - don't get me started on that story! ) and it doesn't add any noticeable vibration.

 

The shaft flexes. Simple as that. End to end.

 

I had my rear shaft out recently to do the u-joints and it definitely did not flex in any perceptible way.

Maybe someone smarter than I can advise, but I'd be concerned with flexing like that.

 

The only play in a driveshaft should be rotational, at the yoke. Or in and out at the other end. Or if the u-joints are shot. The shaft itself? No. Thats bad. Replace it.

 

Just out of curiosity, what would make the driveshaft start to flex - some kind of metal fatigue or something??