Head gasket. My 77 C10 did the same thing

 

 

It could also be a cracked head of the 0331 variety. IF it's a 4.0, that engine has a cylinder head that is prone to cracking. My WJ head cracked in an unusual way. Most times they crack into the valve area and leak coolant into the oil. Mine cracked into an exhaust port and was creating steam and coolant dripping out the tailpipe. This is a worst case scenario though. It could just be a blown head gasket.

I put a "Clearwater" head on it for a total cost of $1200; $455 for the head and the rest labor. I'm no longer physically capable of that much lifting and stretching so I had to get it done at my friend's shop. The head weighs 79 lbs and the new head was 85 lbs! Jeep also made a better head in 2002 called the "TUPY" head.

There are many, many posts on the forum about this subject and I suggest you research them. There are also tips on how it do a head change as well. As long as there is no coolant in the oil, it's well worth fixing it rather than trashing the jeep.

 

 

There's a test kit to show if there's combustion gases in the radiator. Then you can tell if you've got a blown head gasket or not BEFORE you tear it apart. Are you sure it's coolant and not condensation?

 

 

 

Personally, I can't see any way for coolant to be getting into the exhaust from a bad thermostat housing.

 

Im with Dave. A bad thermostat housing would just mean you would see coolant leaking out of it and down the motor. And dude, you will not get a set price on repairs or even a ball park as each place charges what it wants to. You are going to need to grab a phone book and start calling local shops. But start off by having them diagnose the actual problem first before you have them start working on it.