I've noticed that crushed spot in my exhaust right below the header. We all talk about cat back kits to improve flow when there's this giant restriction right up front. I read that it's there to help clear the front diff, if that's true, can that section be replaced on a lifted XJ? Where would I find that piece (uncrushed) and does it have the O2 sensor port...?

Look into borla, I just installed a header from them on a 86 CJ-7, all the tubes were smooth, no crushed area. Also it definatly did the old jeep some good, and sounds awesome.

I bought a replacement flange at a local auto parts store. Cut the pipe below the the dent, expand the pipe so the new flange will fit inside, and weld it. This was just a cheep "git er dun" fix. Your best bet is to look into borla or some aftermarket offroad exhaust system. Not to be a "Tree hugger" but I like the idea of keeping the converter. I havn't replaced the header yet, but I was wondering if the Borla header tubes have a biger diameter than stock? What is the stock diameter?

Not sure what the diameter is, I think 2" or 2.25. Either way, the flange is meaty as hell and the tubes are bent perfectly, good rounded bends. Installed fairly easly. On a CJ-7 258, complete system was 1200 w/high flow cat.