You will hear all kinds of ideas, here is mine. The YJ intake under the driver side headlight is a stupid place for the intake "if" you do water crossings. The Rock-it type intake is not cold air, but does get your intake up in the motor where water isn't an issue unless you sink it. Many with the TJ keep the filter box but reroute the intake higher.
K&N are terrible for jeeps. I used them on my ATV's when I raced, but knew I was sacrificing engine life for better air intake. Amsoil makes a dry cone filter and pre-filter that allows more air without sacrificing good filtering, K&N just let too much dirt and dust in.
To sum up my thoughts, you are better off keeping the stock box and reroute the intake higher, next would be a Rock-it type intake but with a Amzoil dry filter. I would never use K&N on a vehicle you plan on putting a lot of miles on, I still use them on my quads, but I will never put the miles on them that I put on my Jeep.