Is it like a lifter tick or more of a "diesel" tapping noise? Is it more obvious on start-up or constantly? If it sounds like a diesel then I would almost put money on it being the timing chain. Mine has the same problem. I thought something was really wrong until I discovered that. I have a buddy with a 94 Ford 7.3 Turbo who once said he heard my Jeep's engine over his diesel when I was sitting behind him at a light.
A 2.5 to 4.0 conversion is more work than you may think or I would have already done it. However, it can be done in a weekend if you have the right tools and all required supplies. There was a good write-up on JeepForums about it last time I looked.