Em, the 258CI engine was only used for four years (I think '87-'90), and the smaller 4.0L (242CI) engine actually boosted HP by quite a bit, especially when they brought in EFI. All of the I6 engines tend to be pretty much bullet proof, and stand up to a ton of abuse, but once they start blowing oil it's generally indicating a blow-by problem and time for rings. Have him do a quick compression check and I expect he's going to find a cylinder or two low. If he only finds one low one he might get by with just re-ringing the engine, but if they're all running low he ought to consider a full re-build or a replacement engine. "Crate" engines for Jeeps are very common, and likely as cheap or cheaper than trying to do a garage rebuild without having all of the necessary tools. The "emissions *&$@&$@?\" is not the problem here, and IMO he really needs to leave it functioning to pass his annual inspections with no guilt.

If the compression check is all good then he should look at the PCV & breather. The breathers on those 258's can be pretty restrictive, and if they get a little oily they pretty much plug, and oil looks for easier paths to flow.