Thanks guy's, so it would seem as per the chart that 3.37 gear ratio (stock) on 30.7" tyres (I think that what mine are on 8" wide rim) will use more petrol than a higher gear ratio. But it's not that far out that it should be a problem, what's interesting is that that the stock size tyre on that chart shows that a 4.1 ratio would be better when in low range anyway so it should be fine.
What are some of the potential issuse you can have with an under powered diff:
Overheating engine
Break the CV's
Break the Diff
Would these be on the list, I'm only asking as it can help to understand a little more about you KJ and it limits, and in turn determine how you drive your KJ
I've got to admit that I get a bit lost when trying to comprehend all this sort of talk

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You also need to look at how much low end torque your engine is producing.The I-6 in the TJ won't be as effected as the V-6 in the KJ,the 4.0 makes more low end torque then the KJ's V-6.If you have a desiel it will be less effected to a point.You are right about the t-case gearing,you can get away will a little higher diff gears if you have a lower 4-low ratio in the t-case.I can't wait for the 4.3:1 reduction from the AtlasII t-case and 5.13 diff gears.
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day long
but they have 4 to 1 in the T-case
I supose my problem is (as perhps like many) I just like to drive the KJ, I've often said the great thing about the petrol KJ is you just fill it up and drive it. However I'm comming around

& kind of have to as I want more out of my KJ.