my main problem is wiring; make sure everything works, and take a look under the dash to see if anythings out of place or taped up. if you're going to be spending that much money on a 16 year old jeep that appears to be mostly stock with high miles, it better be in pretty decent shape. and look for any missing screws on the dash, it's a sure sign that somethings been going on with it. and definitelly check under those seat covers, and the carpet if you can. look for any signs of leaks underneath it too. and take it for a test drive; if he's not comfortable with that, then happily agree to a ride instead, it is still his jeep after all.
also, to check the gear ratio, i believe you can do it by rotating the rear tire 1 turn and checking how many times the driveshaft turns (thats just what i've heard, i haven't actually tried it so there may be more to it than that). And i remember seeing in hot rod magazine a disk that you attach to the hub so you can figure out the ratio, i don't remember what its called though.
so check everything you can think of (seat slider, defroster, wipers, even the little things that you would assume to work, even the cig 12v outlet). and don't assume the buyer is honest. get a history report if youre willing to spend the money
and for God's sake, don't go look at it at night, or believe the guy when he tells you he'll fax you the title "tomorrow"