i had recently rebuilt the 4.0 litre in my 98 tj and everything seemed fine, about a month ago my rear double cardan drive shaft failed and the jeeps been parked while i sourced a replacement. i drove it yesterday after replacing the drive shaft and a new problem showed up. the jeep feels like the clutch is slipping especially in 2nd gear but there is no burning smell from the clutch which was also replaced when the engine was rebuilt. the engine feels strong but the cat is tuast, it makes a ton of noise but doesnt seem to be causing any restriction. any ideas of what might be going on?

Are you sure that when the driveshaft went it didn't take out the trans, transfercase or both ?

I lost my front driveshaft and it took out both the T-case & transmission. But my driveshaft actually broke at the yoke. It was violent

yea, it might be the trany. i drove it again this morning and it pulls hard in every gear except 2nd. 2nd feels like your going through mud. so, looks like the problem is probably in the trany.