A lot can be done with a Jag. You may have heard of guys putting in small block chevys or fords. You can also put in a big block, if so desired. There are several companies that provide kits to make it much easier. $1500 will get you everything you need-driveshaft, radiator, motor mounts, everything but the car, engine and tranny! Check out
Johns Cars in Tejas, Jaguar Specialties and/or
Suncoast conversions. I've not yet seen a HEMI stuck in one, but that would be a cool idea-if it can be done!
If you (or anyone else with a Jag motor) want to keep the original 4.2L, check out this article
jag-lovers xj.
In this web published book the guy goes through porting and polishing the intake and heads, cc-ing the heads, stronger springs, valves and a healthier cam to improve hp. No work is required to the exhaust as it flows well enough. Don't worry about the bottom end...it has a strong crank, thick bearings and extra thick connecting rod. Did you know the rods are 7.75" long
(compare to 5.7" sbc rods)?
Whatever you decide, have fun!