Yes on the valve seals. You do loose a little power from valve seals Being bad. Couldn't tell you how much though.

over the last several months I have thought about going to 37's. But the only real gain from it is the ground clearance. There is alot more negative affects going to 37's Like power loss, breakage, and the big one is cost. You already running the spacers and 17" wheels is money ahead. I would have that cost plus tires that cost 400 a peice. I'm probably going to run 35's for a while, they do the trick fine for now and I can get a tire at half the cost of a 37, almost. That 4:1 case is by far the way to roll these day. especially when we start looking at stock gearing. You would have to run 2+ stock cases to come to what the rubicon case puts out. If you did go 35's down the road that will also help the gearimg. Although, the look of 37's on a gen 2 looks bad <img src="/forums/images/graemlins/butwiggle.gif" alt="" />.