I have just got finished "rebuilding" my front axle. I say rebuild because after everything I did to it, I felt that is what I would do. If you have a shop that will put in new seals for $300, I would go with it. It is a real pain in the butt! The tools can be rented at any Autozone or O'Reilly's.
My plan started with removing the axle shafts and replacing the Ujoints. This involved removing everything from brakes, hub bearings, shields and shafts. I have a 1992 YJ. When I pulled the parts, I noticed all kinds of sand and grit in the axle tubes. What Chrysler uses for a "seal" is a joke! On my shafts were a circular plastic "snap together" shield which wouldn't seal the axles from anything except the largest pebbles. I couldn't believe it! I searched the internet and found Alloy USA who makes the nicest seals I have ever seen. They run about $60 a pair and are very hefty. I ordered them. Alloy USA makes two kinds for the YJ: the OEM axles ones and the "Grande" axle ones, for larger diameter axle shafts. While waiting for the seals to come in, I sent the shafts to a local powder coating shop who sand blasted them and coated all areas except where the bearings and Ujoints went. The shafts were beautiful and then new Ujoints were put in and I was ready for the new seals.
Problem: The new seals came in and they wouldn't fit over the passenger side shaft. My shaft was too wide for the seal. I called up ALLOY USA and talked to a fantastic customer service rep who guided me through the process. When he realized he wasn't going to be able to fix this situation, he guided me to one of his competitors who might. WHAT SERVICE!! I MEAN BECAUSE OF THAT MAN, I AM GOING TO EAT THE EXTRA COSTS OF ALL OF THE SEALS I BOUGHT! It wasn't his fault his seals didn't fit. I bought my jeep used and obviously this particular shaft was replaced with some aftermarket one. It wasn't even in Jeep specs.
I contacted Superior Axle and Gear and told them the situation. A man named Mac talked to me about it and told me they sell a conversion kit to put in a solid axle and replace that axle "disconnect" much like the current TJ. He said Jeep had so many problems with the YJ that they didn't make the same mistake with the TJ. With the new axle shaft, the Alloy USA seals would work. He even complemented ALLOY USA saying, "They have the best seals he has ever seen." So now I wait for my axle conversion kit to come in.
As I understand it, the seals that would be leaking are outside the chunk area in the axle tubes. They can be replaced but getting everything out to do it is extremely time consuming. You will need special tools, and as mentioned, you can rent them. But if you have a shop that will do it for $300, THAT IS MONEY WELL SPENT!!