Based on the wisdom of the Jeep forums, it would appear that the D35 and axle breakage go together like housecats and sleeping.
On this board alone, I think I've read a couple of people have snapped them running 31" tires and the 4cyl while wheeling. And using the D35 with 33" tires and just the 4cyl engine looks like a serious potential problem off-road (see Jeffy's photos of guys with broken D35s)
So, I was on the Quadratec site today looking to replace my shredded YJ carpeting. I happened again upon the company's 3 stage buildup photos of a Red 4.0 TJ, again, and read them each in detail. I was a little surprised by what I read. Here's how their 3 stage TJ buildups breakdown in the tire/axle category:
1) Stage 1: 31" tires, D30/D35, 4.0L
2) Stage 2: 33" tires, gear change, D30/D35, rear auto locker, mod 4.0L
3) Stage 3: 36" tires, gear change, D30 and D35 "Superkit," 2 ARBs, more heavily modded 4.0L.
When they get up to 36" tires on the stage 3 they finally change the axle shafts and I guess install a truss of some kind as part of the D35 Superkit. But, unless these "Stage" examples are on-road all the time, it almost seems like Quadratec is being a little negligent with their advice regarding adequate real-world, Jeep off-road setups.
It would seem like the correct tire/axle setup for each "Stage" off-road, at least according to this forum, would be:
1) Stage 1: 31" tires, D30/at least D35 "Superkit" or consider rear swap, 2.5L
2) Stage 2: 33" tires, Axle swap to D44s or Ford 8.8s (or if you you have a soft-spot for the D35, a "Superkit," but risking a bent housing, if no truss, which could affect safety and road-worthiness), gear change, lockers, mod 2.5L
3) Stage 3: 36" tires, Axe swap to D44s or Ford 8.8s, gear change, 2 ARBs or other driver-adjustable lockers, highly modified 2.5L or swap.
I'm guessing you could maybe get away with the example Quadratec Setups 80% of the time you are off-road, rock-crawling. But, that other 20% bothers me.