If the towing/hauling capacity is down it's probably only because the truck itself weighs more and the 4.0 is the same. I've owned both. The Gen 2 is longer, with most of the extra room in the rear seat. Ride and handling is so much better than a Gen 1 that is isn't even funny. No more swapping OE shocks the day after you buy it. I have 99,500 miles on mine with the original struts and they are still perfectly fine. This is good because they are pricey when you do replace them. The bed in a Gen 2 is slippery for whatever reason so I got a rubber bed mat for mine so I don't fall down and break my neck. I wouldn't bother with a V8 unless you tow a trailer. The V6 is more trouble-free, the V8 tends to break spark plugs and exhaust manifolds. Gen 2's have a drain plug on the rear diff so it's easy enough to change the lube yourself if you remove the spare tire. Front axle still has to be done at the Qwicky Lube, just had mine done again last week. Downside, a Gen 2 is not as off-roady or liftable and has traction control instead of a limited-slip. A Class II hitch is standard on a Gen 2 while Gen 1's just have a Class II bumper ball. It's good for 3500 lb, if you're going to tow larger stuff then look for a Gen 2 with the optional Class III hitch that comes with a 7 pin connector and brake hookup.
