1) Do I also have to convert to power to be able to apply enough braking force?
No, this is subjective as you might like power assist but not needed for rear discs.
2) Can I use the same master cylinder?
Yes. It is suggested to use a 15/16 master cylinder for better pedal feel, but that is not limited to just rear disc brakes.
3) Do I need to install a proportioning valve for the rear discs?
No. Dr Diff said remove it and use a Drum/Drum distribution block.
I'm in the process now of installing Dr Diff 11-5/8" rear discs (I have 13" front) and with what ever kit you buy be sure you can get parking brake lines and be prepared to make your own rear hydraulic lines. You will need to install longer wheel studs.
I do suggest avoiding the cheap kits that use a GM caliper (i.e. Summit, Jegs, Right Stuff, etc). Stick to Wilwood, Dr Diff, or Baer. There are DIY JY swaps from the Cherokee and I think some other Jeeps. I take it you have a 8-1/4" rear?
