Bought a 2003 Explorer, last summer, pretty similar vehicle, though mine is part time 4wd, for civilized camping...
IMO, any vehicle can be taken to any level of off road capability... given enough time, work and money... (experiences says that beyond a certain point there's not much original vehicle left though).
had the transfer case out when I had the tranny rebuilt; changing out the AWD 'case for a part time one would provide low range but some research into how the computer reacts and installation of a dash switch would be necessary, along with some drive shaft measuring/building (research twice buy once...).
Haven't taken mine off road (gravel roads and camping spots do not count) yet, but I expect that it will do OK at least until I lift diagonal tires (IFS is not particularly good at wheeling, IMO).
Looking at selectable lockers; the front IFS has few aftermarket drop in options that I have found... (really need to count the front diff cover bolts to conclusively identify the diff).
Next trip to the scrapyard I will be looking for rear tow points/loops...
Enjoy!