Yup. The most common ratio with the 2.5L and 4spd manual trans is 3.55, which is too high of a ratio (too low of a number) for that engine and bigger tires. There's a chance you've got a better ratio, but you'll need to confirm it. The most common ratio for a 2.5L with the 5spd manual (same trans but with overdrive) is 4.10. That would help with the larger tires. Being 2wd it'll be half the work too. :D Look for any MJ/XJ/YJ/TJ rear axle with 4.10s in it. And if you're wondering, changing gears in an axle is one job better left to the pros, and it can be very expensive. :( Plus then you'd be wasting all that money on a Dana 35.
As to the tires sticking out, the bed of an MJ is actually wider than the front (the front and rear axles are about the same width). A solution would be to buy a pair of wheel spacers to push the rear rims out to better visually match the front. (make sure the spacers are "hub-centric" and of decent quality).