The XJ is a good platform and the Chrysler 8.25 will serve you fine at the size of tire you are running.
Do be aware that the 8.25 got a change in shaft size in mid/late 1996. If you have a pre-'96 you have 27 spline shafts. If you have a post-'96 you have 29 spline shafts. If you have a '96, well, good luck figuring out what you have. The dealership might be able to tell you by your VIN, but even they don't always get it right. 29 spline shafts are preferred, but at 32" tires you would not have trouble with 27 spline shafts.
Enjoy the build.