can i replace my rear drums brakes with the teraflex disc brake set up? I'm wondering because of the abs etc, please advise. Thank you.

 

I take it you have a Dana 35 c-clip with ABS. If not you have a Chrysler 8.25 non-ABS. Those are the only two axle options for that year. Make sure you know which one before ordering.
I don't know about the ABS, you should contact Teraflex. It's not likely you'll find someone who has done the same thing as Chrysler 8.25's are preferred over the Dana 35 and most rear disc brake swaps XJ owners do are from ZJ's.

 

Like Paco said, verify which rear axle you have first. If you have the 8.25, you can swap Liberty rear discs (i believe). Check the how-to section. There's a write-up on it.

 

Thanks for the info, it has the abs on it and one other question. its really clean so i dont want to get carried away with a radical lift since my wife will be driving it and probably wont see much off roading etc. I was wondering about a basic lift just to get some more clearance and a little bigger tire etc. thoughts?

 

I went with Rocky Road Outfitters. Link here.
I bought the 2 inch complete(extended/bar pin eliminators) budget lift - $139 and a set of U-bolts - $11
Along with bumpstop spacers, Go Jeep's writeup here, I was able to fit 31x10.50x15 tires on stock rims without trimming the fenders. I'm loving the way it looks.