I have an 87 Wrangler with a 258 followed by an automatic.  Motor took a dive, I have another 258 yet one of the piston's skirts broke off so I could just pull the piston and replace it.  I have a 304 great running with 80K on it yet I need to dump $200 for weld-in motor mounts then get duel exhaust at around $200.  Anyone have any suggestions?  

I say throw the 304 and the $ in and go. The only prob might be your tranny. It would think that it would hold up to the extra hp. Unless you just love the 90 something horsepower your putting out with the 258. The choices are everything from cheap to extreme, low output to high output. Alot depends on what you're going for. Mall crawler, rock crawler, daily driver, weekend warrior, etc. Decide what direction your Jeep is going and go from there.

Thats my nickles worth...  

Thanks. I'm going for the weekend warrior with reliability.  I don't plan to do huge power upgrades, just headers and a holley (easier to tune).  Since I have to replace the exhaust anyway, I might as well get it as far down as I can.  I don't want loud, I just want a strong runner.  Thanks again!  

The tranny should hold up, just dont go crazy with power.