Alright, so my parents had the car for maybe 6 years, its a 1994 cherokee sport 5spd. Everything under the hood and the body is in mint condition, or at least will be. The only problem is the undercarriage is moderately rusted out, after about 15 years of driving in a 200-300in of snow environment. All stock.

So heres the things i had her out wheeling and i nailed a tree at about 40mph...
Took that tree like a champ though i had to shut it off myself.
Getting it fixed right now.
New parts: Front assemb., hood, front fender, air filter, alternator, radiator, water pump, LCA, computer, and batter housing.

So heres the Question is it worth lifting? after being in the accident and the undercarriage rust?

If i do lift it im going to get a 3in or 4in lift prolly just a budget boost.
Then do some massive mods and fit some 38's in there (dont tell me i cant either, ive seen it done)

my question is.... why wouldnt you lift it ?? lol if you alreadt wheel and obviously enjoy it go for it! you can always keep you stock stuff for when your xj completly dies and just swap with your lift kit so you can sell

If you've got what it takes to put 38s under it, then you probably shouldn't even bother asking.

Did you check to see if te unibody rails were damaged from your accident or rust?

Man its all up to you if it is worth putting the time and effort into it do it. My 83 cj7 Ive put 10 times what that thing is worth into it, and it still doesn't run (got stolen and recovered). I plan on fixing it again, because It was worth it to me to do it. If the jeep is important to you dont abandon it for something thats "easier" .The rust can be fixed, if you search there is a ton of info on the subject. The 4.0 will go forever, I sold my last cherokee with 256k on the clock and I still see it driving around town.

38's on stock axles? Lets hope not.

And to answer your question if its rusty, lifting it will be a challenge but it can be done with lots and lots of pb blaster.

I was going to use some axel strengtheners, probably chromoly dana 44 shafts. Im more worried about the wheel well mods, and battery and computer relocation than breaking the axel.