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The 2002 Liberty is the little Jeep that better.

It better help people forget the 18-year-old Jeep Cherokee it replaces, not to mention forget about the rivals in the compact sport-utility segment, the Toyota RAV4, Honda CR-V and Ford Escape.

Initially, Liberty was to be a companion for the aged and boxy Cherokee. But then as a cost-cutting measure DaimlerChrysler opted to drop Cherokee and go with only Liberty.

Can’t say that we’ll miss the Cherokee moniker. For years consumers had difficulty distinguishing Cherokee from the larger and more expensive Grand Cherokee.

“There was confusion,” said Rick Kukucka, Liberty product planner. “People would say Cherokee when referring to either Cherokee or Grand Cherokee and that’s one reason for the name change.”

To avoid confusion between Liberty and Grand Cherokee, Liberty styling leans toward that of the even littler Wrangler, sharing the same round headlamps flanking what D/C refers to as its “trademark” seven-slot Jeep grille.

Liberty is built on a 3-inch longer wheelbase than the old Cherokee to improve ride and a 2-inch wider track to improve handling. And Liberty is 2 inches wider upfront, 3 inches wider in the rear to provide a more comfortable cabin.

Yet, Liberty is 2 inches shorter than Cherokee, inches saved in the engine compartment because a V-6 replaces the inline 6.

Liberty is offered as a base Sport with gray plastic bumpers or top-of-the-line Limited with body-colored plastic bumpers. You have the choice of two- or four-wheel-drive. D/C expects 70 percent will opt for 4WD.

We tested the Limited 4×4 that comes with a transfer-case lever to engage four-wheel high or low. D/C emphasizes that RAV4 and CR-V are basically station wagons with 4WD added so they aren’t meant for off-roading riskier than pulling onto the shoulder to get to your mailbox. Liberty, D/C insists, is an on-road or off-road machine.

There’s a choice of a 3.7-liter, 210-horsepower V-6 derived from D/C’s 4.7-liter V-8, and a 2.4-liter, 150-h.p. 4-cylinder, same offered in the Chrysler PT Cruiser. Initially, however, only the V-6 is available and only with automatic. A 5-speed manual will be added in the fall, accompanied by the 4-cylinder.

D/C offers a 2.5-liter, 140-h.p., diesel 4-cylinder, but only for export because, Kukucka said, diesel fuel in the U.S. isn’t as clean as that in Europe and to burn U.S. diesel would mean changing engine calibrations that would offset mileage gains.

“Even when we test the vehicle here, we import diesel fuel from Europe,” Kukucka said.

The U.S. will get around to cleaner-burning diesel in ’06-’07, Kukucka said, and maybe then a high-mileage diesel would be added here.

Fuel economy is a Liberty shortcoming. Small SUVs are supposed to be an alternative to gas-gulping big SUVs. The Liberty V-6 is rated at a disappointing 16 m.p.g. city/20 m.p.g. with automatic; the 4-cylinder with manual is rated at 19/23. Kukucka said the larger dimensions along with the weight added to come up with a more rigid body to reduce noise, vibration and harshness increased pounds that kept mileage down.

While keeping noise, vibration and harshness down, you’ll find ride and handling more along the lines of a firm Ford Escape than the softer, car-like RAV4 or CR-V.

Liberty has an independent front suspension whereas Cherokee had a solid axle. The independent front suspension was designed to soften ride on the road while giving Liberty up to 8 inches of suspension travel to track over bumps more easily when off-roading.

“Car-based SUVs are fine for the road, but can’t hack it off-road since most don’t allow 8 inches of suspension travel. Liberty is a dual-purpose SUV for on- or off-road,” Kukucka said.

Liberty also has 16-inch all season radials as standard; Cherokee came with 15-inch only. You can upgrade to a wider-profile radi for better road handling as well as a wider footprint for off-road grip.

How many will take Liberty off-road? Maybe a handful, but D/C wanted bragging rights.

When it came to design, interior and exterior stylists sat next to each other in the Liberty studios for the first time, rather than the common practice of them being separated by at least one floor, Kukucka said.

So, the rounded head and taillamps theme is carried inside to the rounded air ducts in the dash and rounded satin-finished chrome release handles on the doors. Minor point, but it looks good.

Noteworthy items include second-row seats whose bottoms slide forward and backs fold down in one motion after pulling the lever, rather than flip-and-fold second-row seats common in many SUVs. One drawback to the one-motion slide and fold is that the seat back cushions don’t lie flat so you have to put up with an incline when hauling cargo.

You’ll also find an ample numbers of cupholders (built into the doors for rear-seat occupants) as well as coat hangers built into the ceiling grab handles; water-tight fog lamps; rear side windows that motor all the way into the doors; map pouches in the backs of the front seats; and plastic grocery bag holders built into the backs of the second-row seats.

You can open the rear window on its own or open it together with the door to load or unload cargo. The full-size spare is mounted on the rear door. You have a choice of dealer-installed soft or hard plastic spare-tire covers.

Couple of gripes. Power steering takes too much effort, making the simple task of turning and parking more of a chore than it should be. Also, there’s massive headroom front and rear, but very narrow rear-door openings so you will rub against the rear wheelwell moldings when you get in or out. And to capitalize on the added cabin width, D/C moved power-window buttons off the door armrests and onto the center console, where they take some getting used to.

DaimlerChrysler plans to build 200,000 compact Liberty SUVs annually, 160,000 for the U.S. and the rest for export. Just wishful thinking, but take a long, hard look at the Liberty profile and imagine replacing the rear cabin or maybe part of it with a pickup bed for a niche entry to vie with some car/truck, SUV/truck hybrids coming to market.

Base price of the 4WD Limited we tested is $22,720.

Standard equipment includes dual, depowered air bags; air conditioning; power windows/door locks; power, foldaway mirrors; AM/FM radio with CD player; tilt steering column; power outlets front and rear; rear-window wiper/washer/defroster; cruise control; front and rear floor mats; roof rack; fog lamps; and remote keyless entry.

The option package that brings leather seats, tinted glass, power driver/passenger seats, power heated mirrors, steering-wheel audio controls and a variety of dress-up items runs $2,945.

But you can be co mfortable with just anti-lock brakes at $600, air curtains at $390 for front and rear occupant protection in a side collision and power sunroof at $700.