'97 is a pretty good year. Best year would be a '99 IMO. In 2000 they went to the WJ version of the 4.0L that has a coil pack. That engine misses when you cold start it, and there wasn't a power gain thanks to tightened emissions. '99 has the WJ intake, which was probably a bit of a HP gain, though it was never re-tested and claimed as such.
'99 was the first year for the dial control HVAC, which IMO is far superior to the slider cable HVAC in the '97's and '98's, which can stiffen up with age.
I think the D44 was an option that came mid-'97 model year. Pretty easy to spot, but the D35 is fine if you're not going to beat it mercilessly. Has more clearance than a D44, for what that's worth...
AX15 is a good trans, but if it hasn't been rebuilt with 200k on it, it'll probably snick a bit going into 3rd gear. If it's does it going into 2nd and 3rd, it's time for a rebuild. The AX15 floats gears much easier and smoother than the NV3550, which would be found in a 2000+. It also has a better reverse ratio IMO, as reverse in the 3550 is far too high.
Rust can be a problem inside the frame, as it collects dirt and then holds moisture. Also the fender directly above the front tires, where there is a ribbed stiffener plate.
I'm on the original radiator at 90k miles on my ~'05 vintage TJ, but I didn't drive it much in the salt when I lived in MI, and it's been in CO for the last 11 years. IME, people who follow closely on salted highways and don't wash their vehicles till spring destroy radiators, not time or vehicle model...
I can attest to rear main seals weeping. I replaced mine once, and it lasted about a year. It doesn't leak bad, just marks it's territory when you shut it down hot. Just let it drip.
Oh, clutch got cheapened up in about 2000 as well. Earlier clutch was bulletproof, later one is OK, but not as HD. At 200k, the forks may let go at some point from fatigue... Depends on drive cycle. New clutch not that bad, and a good time to replace the main seal and rebuild the trans.
If you're in the rest belt, upper shock bolts are going to break off when you try to take them out.
Beyond that, I'm running about 2" of lift via springs/spacers, and 255/85R16's, which are ~33x10.50's. I like the setup. Because this is not quite enough lift for 33's, I went with a 3/4" body lift to keep them from tearing the front fenders off with the sway bar disconnected. I added a 1" MML and raised center skid plate at the same time, so didn't have to mess with radiator shroud, shift linkages, etc. LOTS of ground clearance, and it drives almost like it did stock. I had 31's on it for a while when I first put it together, with about 1" of spacer lift. It worked great like that, but then I got greedy and bumped to 33's for a Moab trip, and I've never gone back. I like the narrower 33's, as I get clearance w/o as much of a mileage/power hit.
If you aren't afraid of running adapters, a set of take-off JK Rubicon wheels/tires is a good fit for a mildly lifted TJ... 255/75R17 IIRC. I'd rather a bit more sidewall, but that size isn't horrible, and tire choices are pretty good.
FWIW, I can no longer recommend BFG AT's on solid axle Jeeps. They are a great tire, but something about the square tread seems to really make many XJ's and TJ's prone to death wobble, and other tires don't seem to do that, even on the same Jeep. On an otherwise fit vehicle, I've traced most death wobble to the lower control arm bushings being worn out or too soft. If everything looks good, and it still gets DW over bumps or something like that, then replace the LCA's with some aftermarket ones and the problem almost always goes away. If you're not familiar with the term, DW is NOT a bit of shimmy in the steering, it's all out havoc causing your vehicle to become more or less un-steerable. If it happens, yank it into 4wd and the DW will damp out almost immediately. Otherwise, the only way to stop it is to almst stop, and it usually gets worse when you get on the brakes...
That's probably enough. Suffice it to say that a '97 TJ has few "inherrent issues" if it's maintained well.