If you are trying to keep it jeep, throw a 4.0 in there. Otherwise, a SBC is the way to go in my opinion. They are relatively inexpensive, tons of aftermarket conversion stuff out there, you can get parts anywhere in the country, etc, blah, blah, blah. Unless you really need to do it cheap I would definately consider a modern Vortec engine 5.3, 5.7, or 6.0. These in stock form will give you more power then you will ever need for CJ7. If you like the auto, a built 700r4 is a good tranny, however it is long (especially for a CJ7) so check your lengths. There has also been some front drive shaft clearance issues on these. Another option is the Vortec 4.3 V6, which is another great proven engine(essentially a 5.7 minus 2 cylinders). It is shorter so you could move it forward on the frame to compensate for the tranny.
All these swaps are well documented on the web. Take a look at Novak Adaptors for some info/research on what you want to do.
I currently have a 305, TH350, NP205 in my Scrambler. It will be getting a TBI 350, Th350, D300 soon. My other rig is getting a 6.2 Diesel, NV4500, D300. I have a CJ7 that will probably get the 305 set up out of the Scrambler.
Also look into the motor mounts from M.O.R.E. They are strong and very nice, well worth it, plus they off set the engine a little to compensate for front driveshaft clearances.
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