It Has happened on stock KJ's too. The engineers at Camp Jeep told us a similar story about the front diff but also made comments about some cost cuts on the KJ. They didn't mention the diff as part of those, but I wouldn't be surprised if DC dictated to Dana that they needed to save some money on each front diff.
I think it is a somewhat isolated problem as I have seen a lot of abuse taken by some diffs and others break fairly easily. There are people here that have beaten the crap out of theirs for many miles w/ no problems and others that grenaded in a situation where many others didn't. (mine for example)

If anyone gets the chance to talk to the engineers at a Camp Jeep event or other event, see if they are aware of a fix on any of the newer KJ's.

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99 TJ
71 C101
04 KJ
03 SFA KJ Sport
LOST JEEPS So-Cal

It has to do with the type of abuse the diff takes not the torque of the motor or the tires that breaks the KJ's. I am sure the CV's will break more then the diff if the vehicle isn't airborne. Talk to the other people that have broken them. It usually occurs from getting airborne NOT from just abusing it by going full throttle into a mud hole. The same thing happens on solid axles too. If you are coming over a hill try to let off the throttle so you don't get air. If you still get air-let off the throttle. Think about it-axles spinning at 40 miles an hour or more with no friction touch the ground and get lots of friction (usually enough to stop them)...those sudden loads are the problem. A lift makes no difference and tire size makes no difference in this case (indynewfie's tires are stock size).

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'02 KJ Sport V6 4x4
3/8" Clevis lift
Rusty's 2.5 lift
255/70/R16 Fleet Farm All Terrain (yes they work)
Class 3 hitch
Hellas
Police Scanner/CB radio
LOST #: JH061986

... $4000+ repair job. Covered under warranty.
I will be speaking with my dealer to install the "collar" so that I get some peace of mind and the KJ will continue to be warranteed.

I will continue to wheel this rig.

Actually drives as goos as new now.

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04 JEEP Liberty Renegade (Black)
3" lift, 1.5" wheel spacers, BFG TA KO
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{----__---_(olllllllo)
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