I'm guessing you are meaning the downsized Cherokee aka the XJ and not the Grand Cherokee(ZJ)?
A 2" lift on an XJ would allow you to comfortably run a 30" tire. If you cut into the fenders you could do 31s but wouldn't flex much.
Typically any XJ is fine with 3" of lift without needing any attention to the rear driveshaft. I personally have run 8" of lift with no SYE eliminator. Correct pinion adjustment goes a long way and the long driveshaft on the XJs is more forgiving than on a TJ.
2" spacers would work for the front, rear could be(in order of best to worst), new leaf packs(the ones on a '92 are probably shot anyway, an AAL, longer shackles, spacer block. Typically spacer blocks on an XJ with stock leafs cause massive spring wrap and should be avoided or kept to a minum(.5"). Stock shocks would be fine for 2". This could probably be done for under $250 depending on what you do with the rear springs.
I would recommend a 3" or 4" lift for wheeling. This will allow you to run 31" tires and will flex well.
Don't forget to budget for tow hooks if the XJ doesn't come with them. The unibody "frame" on an XJ isn't strong enough to bolt a tow hook directly to it. A reinforcement bracket system of some kind MUST be used. A used factory system came be had from $50-$100.