Here is my reply to the message I just posted:
That’s awesome that you have an Iron Duke Eagle. They are the best to swap because you have the least emissions requirements, so the end product will be 50 state legal. First off your transmission is an SR4, which needs to be scrapped immediately. Don't trust your car to complete any trip until you have replaced it. I've broken 6 of those shift levers.
The transmission is the real bugger. I make it a personal requirement that the transfer case back stay stock. That’s why I only recommend an SD33T or GM 6.2L. For a transfer case I suggest the NP242, you'll want a low range and the 219 sucks even though it has a viscous coupler and is a better bolt in. I use the 242's open diff "Full-time 4WD" and it’s great for all wheel drive. The viscous coupler has very little impact in most conditions and isn't worth the maintenance issues. With the 242 you also have a "Part-time 4WD" where the front and rear outputs are locked, which is perfect for severe conditions or if you break a driveshaft.
I have never considered the Mercedes engines because I don't want to deal with transmission adaptation. It’s just not worth it. I personally suggest you look into finding a military 6.2L diesel. That’s the easiest to install because you already have the Iron Duke bellhousing. It will bolt to the GM diesel if you switch to a slightly smaller 156 tooth flywheel from a gas GM engine and if you use a fresh Iron Duke starter. All bellhousing and motor mounts are the same as a small block Chevy gas engine, which is a great advantage of those diesels over any other truck diesels. They are also very easy to find because so many military trucks had them. You'll need a strong transmission, so a T18 to NV3550 adaptor from Advanced Adaptors will let you install an AX15 or NV3550 behind the SR4 bellhousing. The NV3550 is much stronger than an AX15, so look for one of those first. You'll retain your entirely stock clutch system, which is a huge advantage.
It’s shameful, but your old Iron Duke accelerates and feels more powerful than an SD33T. It is literally as powerful as an SD33. Keep that in mind before you start your conversion. Your Iron Duke with a T5 swapped in will reach 30 mpg highway, and with a low range it will do just fine on the trails. Generally the diesel conversion isn’t worth it. If you want towing ability the 4.0 conversion will have twice the power and three times the acceleration, with 25+ mpg and considerably less cost and effort to install. Do not expect to be able to tow with the SD33, it just can’t handle it. My SD33T Scout is my daily driver and I often yearn for the larger 6.2L. That’s also true of the Mercedes engines, they aren’t powerful enough for an extreme machine and there is no point in doing the conversion if you aren’t looking for an extreme machine.
I am still sticking with the SD33T because it’s perfect for what I want to make. I have a 4.0 6 speed SX4 for a daily driver and a 401 V8 for towing, so this one will never see those applications. The other advantages to using an SD33 include the transmission output. I’ll be using an NV4500 so it will mate up to all Jeep transfer cases. There is no other transmission option except the original T18 4 speed because the input shaft is so long. The NV4500 is only an option because the Scout community has someone who makes the conversion kit. The other huge advantage is it’s externally the same size as a 258 and it has the exhaust on one side. Putting a 6.2L in will suck because it has exhaust on both sides and you will have considerably more clearance issues all over the place.
Don’t forget that a diesel doesn’t start instantly. Jumping in the car, turning the key, and kicking up a rooster tail is not going to happen. Don’t expect to ever have a diesel vehicle as your only vehicle. You’ll eventually resent it and replace it.
Of course you should have a Cherokee Dana 44 axle with disc brake conversion in the rear, so you’ll have to plan on replacing and rebuilding the entire vehicle and restoring it along the way. The conversion itself is cheap and easy compared to the restoration of everything else. If you decide to go for the GM diesel, which is cheaper in several ways, you should still expect to spend at least 8 months and about 8 grand in the diesel conversion. A 4.0 conversion done very well should take about 4 months and three grand. The difference in fuel costs will never bridge that gap and the 4.0 is more practical.
Hope that helps. Once you have pulled the trigger and decided what engine and niche the vehicle will have, I can help discuss how to fit it in too. Enjoy!