This is pretty common, the best way is to lift the rear of the body, unless you have a BL already, by unbolting the rear body mounts or however you can to get in there from above. Then take a chisel or something of the like and break off the welded on nut with the bolt stuck inside. Then replace with your own new nut, washers and bolt. I have tried using an easy out, but these things get rusted stuck pretty hard and the above method prevents you from dealing with this again.
--"I gotta disease...and the only cure is more Jeep parts"
If it's the one on the inside, not the frame side I was able to get a Harbor Freight right angle drill in there to drill it out and re-tapped it to 3/8"-16 that was not too bad. On the frame side you can heat it with mapp gas and back it out from the top with vise grips. Or try the easy outs after heating the bolts. You just have to be careful with the gas tank so close! Good luck, this was the worst part of installing my lift.
Here's another way to remove the broken outside bolt. Started replacing the shocks on my son's '02. We're in New England so you know there's rust. Soaked the rear bolts with PB blaster and then tried to shock them using the 14MM socket, 10" extension and 3lb hand sledge. Whacked the bolt head very hard but, of course, the outside bolt immediately snapped.
Tried drilling but the break was convex and I couldn't get the drill to start. Took off the wheel liner and could see the top of the bolt right behind the frame. Using just my 3/8 10" extension, it fit nicely onto the remaining part of the bolt, gave it a few more whacks then tried vise grips....no movement. Getting frustrated so gave the bolt a few more very hard whacks and when I went to put on the vise grips the bolt was at an angle! Put a screw driver on it and straightened it out with a couple of whacks then used the extension to whack the bottom of the bolt some more and now it's at a very strong angle. A couple of hits with the screwdriver to bend it back and it snapped right off! Mine only had one small spot weld on it so it was easy to snap. Fortunately the inside bolt came out without any issues. Got some grade 8 bolts and nuts at Lowes and the shock is now installed.
No BL, no angle grinder, no air hammer, no drill and no tap! We'll see how the passenger side goes next weekend.
Haven't looked at my 2001 shocks recently to remember all the clearances but was wondering if there was any way to get an impact wrench on the bolts? Sometimes the jarring will shake something loose that steady pressure won't. Or would it just bust the bolts quicker?
With an extension you can get to the bolts with an impact drill. Unfreezing them was my objective with the hand sledge. Realistically, with the amount of rust that was on the outer bolt that snapped, I doubt it will work. Do try to get some PB blaster on the top of the nut first by removing the plastic liner and it might help you out.