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Hi Josh, I was going to do this exact thing to my 97 Cherokee, however I was going to stay gas. The engine ( a 4 cyl. Ecotec or Jeep ) weighs less, easier to install, costs less, and gas is cheaper than store bought diesel. There is no problem with different speeds on the front axle, as the electric motor will only add torque to the system, at whatever speed the ICE is driving the vehicle. In my case I would modify the transfer case rear housing to accept the motor, in line with the front driveshaft. The batteries would mount in a box, set into the floor, under the rear seat.
Chuck
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