When I have cruise on and going up hills, it won't down shift unless it either gets below 35 MPH, or I tap on the gas.

My dad's 99 Cherokee downshifts just fine when it should, mine is a 2000 Classic. His is also a classic. He has 4PT-4HI-N-4L on his 4x4 shifter and I just have 4H-N-4L... I don't know if that makes a difference or not.

 

Mine does both. Decides to downshift sometimes amd other times it decides to not. I think it might have something do do with how many times you push set on the controls? Just a thought.

 

Check the connections to the CC actuator (on the pass side). The plastic vac tubing can crack. Happened to me.

 

Maybe try resetting the cable from throttle body to transmission. This affects where the trans shifts in relation to throttle.
The transfer case will have no effect on cruise.
This could be an issue of not enough vacuum to activate the throttle, just enough to hold it steady.

 

My button sticks, i think.
It works all fine and good, just most of the time when you press the on/off switch it doesn't turn off. Tapping the brake still disengages it though and it works perfectly fine otherwise.

Sounds like mentioned before, OP, check your vacuum lines

 

^ My 96 is the same way. Once it is armed (green light) the on/off switch will not cancel the setting or disarm the system.
The other two buttons were 'refreshed' with compressed air. The buttons get dust build up on the contacts, due to our rigs being ancient.

 

Well it turns out I have a dangling vacuum line that is plastic, and plugs into the tranny then goes up above the motor and ends at nothing just a stopper at the end. I'm guessing this is it, but it's been raining and I don't have anything to lay on to get under there LOL

 

That is the vent for transmission. The end cap keeps debris out. The AW4 tranny will not have a vacuum line.

 

What is this "cruise control" you speak of? If my SE model was any more basic it would have wooden wheels and oil lamps for headlights.