Does as well as it can. All loaded down we are about 11,000#! I have a Flashpaq programmer so I reprogram to the towing tune every time. If I keep it about 72mph I get about 11mpg! It runs about 1800rpm at 72 and rarely ever kicks down a gear though it hates long hills. I know I shouldn't but I will speed up going down hill to help it out going back up. Once my wife's car dies the XK will go to her and I"ll find a pickup that'll tow a lot better.
This winter I'm planning to put a pair of chevy 10 bolts under it and I just picked up some 35" boggers. Going to plate the "frame" as well and get a Dana 300 since the chevy axles are passenger side drop. While I really want to put 1 ton axles under it I can't afford it right now. Ultimately it'll have one ton axles, 40"ish tires, Chevy 350, turbo 350/400, np203/205 doubler, exo or interior cage, chop top, etc. I spend lots of time on Pirate4x4 just looking around and getting ideas.
When looking for something to trail I needed room for my wife and two girls. EVERYONE has a freaking Wrangler and I really didn't want one of those. Plus the guys I was hanging around with have a full size Chevy on tons and a K5 blazer on tons as well. I couldn't afford to go that big as it requires a bigger tow rig and trailer as it is the XJ will be heavy enough. S-10's are to small, Tracker's and Samurai's are hard to come by here. A Toyota might have been a good option but I didn't even look at those plus I don't know anything about those trucks.