Thats sounds like a sweet deal actually but has to be approached very carefully to make sure you don't land in trouble as finding decent parts for the original CJ7 engine is tricky....
The original CJ7 engine is a 4.2L and you have to make sure that its not the 4.0L Wrangler engine which has the front 4x4 diff on the other side as the CJ7 transfer case. I think CJ7 drop is right side while the Wrangler is left. Though I doubt the Wrangler one will go for that price...
You could mate the Wrangler engine to a CJ7 gearbox to solve the issue but there is a speed sensor in the flywheel which is tricky....