You don't! the NP249 in your grand has only 4 high neutral and 4 low. 2wd isn't an option. Correct, but you could remove the front drive shaft from the transfer case.
The NP-249 uses Dextron II or ATF Plus/Type 7176 (or their superceding fluid type) automatic trans fluid.
For Grand Cherokee's from '93-'98, it will depend entirely on which transfer case is installed and there were three options available."Command-trac" or NP231 transfer case - 4WD"Selec-trac" or NP242 transfer case - 4WD"Quadra-trac" or NP249 transfer case - AWD** All V8's (5.2 & 5.9) GC's came with the Quadra-trac case stock.If by true 4wd, you mean all 4 wheels turning the same speed all the time, no. The rear axle could have a posi-traction system in it, but the front won't. That would mean that when in mud or on ice the vehicle will have 3 wheel drive technically
IF YOU CLIMB UNDER THE CAR AND LOCATE THE PROP SHAFT (BIG TUBULAR POLE CONNECTED TO THE DIFF) IF YOU FOLLOW IT TOWARDS THE FRONT OF THE CAR IT CONNECTS INTO THE TRANSFER CASE. right behind the transmission