I haven't taken it off road yet with the new lift but a bunch in our group have AEV lifts and they handle well off road and highway. That's what attracted me to it.
I was think the 3.5 too but then I would need to add the spacers to the exhaust and a new drive shaft. With the 2.5 and cut fenders and a trim of the pinch weld and rubi rails, I can still fit a 35" tire with no issue. Can't go any bigger on the gearing (35's will be a stretch) and the stock axels anyway so it suits me fine for right now.
I didn't think I would lift mine right away either but myself and a couple buddies were able to install (my 6 hour install vs his 60 hour install on his lift) no problem with this one. Look into it. It's relatively an easy thing to do and in the grand scheme of jeep parts, not overly expensive.