Okay I just drove out and took a gander at and drove a 2001 Cherokee Classic with 122,000 miles.
Problems noticed:
-small oil leak at the plug of the pan (probably the gasket?)
-my dad touched the inside of the pipe and thinks it's burning oil. (Finger was black)
-the muffler has a rust-through crack about a half inch in length
-my dad thinks the cv joints need to be replaced (heard a clicking when driving)
-he also thinks the brakes and rotors may need to be replaced

The seller is a doctor and doesn't know a thing about cars. He listed it for $4,000 but agreed instantly to $3,500.

It idles fine, shifts smoothly, and the steering is straight. No knocks or anything like that. Both the interior and exterior are about an 8/10, except for a dent in the bumper whiich is no big deal.

Sorry for the novel here, but do you think I should go for it? I'm just a nervous first-time XJ buyer, essentially. My dad kept trying to talk me out of it, I'm doing my best to reason with him. It's my money so it's my choice, though.

 

what pipe? the tailpipe? that doesn't mean it's burning oil. probably 99% of XJ owners here will tell you that they have an oil leak or just fixed one. with jeep 4.0 it's never a big deal. $3500 sounds like a fair deal, but you can bring out those points that you just listed and talk it down a bit more.
about the front axle, you'll be a whole lot better off just finding a Dana 30 from year '99 and under and swapping it in. it's dime a dozen. yours has a low pinion, the ones made before '99 were high pinion. you can get a cherry bomb for a muffler. i think it's somewhere around 30 bucks. calipers, pads and rotors are quite cheap, if you do the work yourself. oh, and welcome to the forum.

 

Thanks, but I decided not to go with it. It just didn't feel "right" when I drove it. Made me feel uneasy.
My dad is also married to the idea of me driving this car until it dies in 7 years. By then most of the XJs will be thrashed or rusted-out. ::sigh::