For your condition, and you have it very clean now, I'd coat that with some fibergalss resin to seal it. Then a thin layer of tiger hair, canned prechopped fiberglass, easy to work with, then when that is set, another paint on coat of resin. Then a rust paint to all round. Good you are tracking your leak source.
The Pour product is excellent also.
Good you caught it before it gets too far and you have to bring in the welder.
Attention Wranglers, don't try this at home. Leave it to a Cherokee owner!

 

UPDATE:

I did some water testing and it looks like the water it coming through where the blower motor seal is. look at the pic.

I am trying to seal it with rtv sealer but its hard to get at with a caulk gun. cant get to it all from the engine bay side. what a pain in the ***.

letting it dry now see if it holds up to another water test. also thinking of using new weatherstrip to stop the water from getting in around the hood and running down into the area.

 

That's pretty common. If that doesn't fix it, your fresh air intake could be leaking under the cowl. THAT one is a pain in the ***. You're probably best off removing the blower motor and putting RTV around it and then reinstalling it.

And Peep.....wow. That is an ugly sight. Looks like a pretty decent job fixing it though. I probably would have given up. LOL I'm glad that people out there are up for such a challenge and to save the Cherokees.

 

In my opinion, they're (cherokees) certainly worth saving if you work on your own vehicles. It makes good financial sense for me, because I can't afford a new vehicle, and there aren't many other vehicles out there that are as easy to work on, with a huge supply of parts available.

It also helps that the Jeep community, in general, is a helpful bunch.

 

Peep that looks just like mine lol


I'm in the middle of replacing the rear pan. the c2c fab pan I bought doesn't cover all the rust so I have to still make small pach panels all over

I did the front pans last winter and I had both those leaks you discribed I ended up taking out the blower motor and silicone sealing around it
Still need to get new weather stripping for the driver door tho

 

I had lost my job back in NOV 2011 and company truck with it. I needed a ride and could not get a loan without a job. I did a lot of research wanting a vehicle that would last and i could work on. this community sealed the deal on the xj as a choice.

I had always liked them anyways plus my two previous vehicles were grand cherokees. I have already done more work than I thought I would or could handle but this group of people here are amazing. like a band of brothers.

 

Sell it! My Jeep is rust free but I'm selling it. :P