To see if there is any engine trouble, do the key dance. Ignition switch off/ on 3 times and leave in on at the third time. Odometer will show any fault code when present.
For the airco, switch it from hot to cold on both sides and feel if you get the corresponding responses. You could check for faults here as well, check : WJJeepsy.com - Jeep Grand Cherokee WJ 1999-2004
and go to airconditioning.
During the testdrive listen for any gear wine, which could mean some beginning diff problems.
Check the maintenance history if available. Jeeps are reliable cars when maintained we'll.
Also have alook underneath for any fluid leaks.
Check if you can select 4 Lo , giving an idea on the state of the T case. I always do that with transmission in N and the jeep standing still.