I have read the articles on installing a mini spool. What I want to know is can the rear Diff be welded? If so...
How?

your Better off with the spool, my welded diff on my samurai lasted about three trips out and when it went it took out everything with it.

The spool is cheap insurance to make sure the welds don't break.  As for how to weld up the gears, just like you would on any other rear end.  Put it in the oven for a while to bake the oil out and raise the temperature of the metal.  Then weld away.

Lincoln lockers is not what you want, its cheap but will cost more in the long run . 

I have to agree with the above.  Lockrites or similar, a Spool or - if you can afford them, ARB lockers are a better choice.

That said, here is a link to a "Fozzy Locker" welding article at Ack's FAQ that apparently resulted in a strong, long-lasting welded unit:

http://www.acksfaq.com/fozzylocker.htm

Again, the only advantage to this is that it is a cheap mod.  I personally do not reccomend it.  I hope your welds are good!

I will triple the agreed negatives on the welding. Its no 5 minute task removing a 3rd. Sure wouldn't wanna do again if it gives out. I waited till my funds allowed and went lockrites front/back. I also replaced every seal and bearing since everything was apart. Been very satisfied and the unlocking click is nothing to what I expected from reading.

My front was welded unbeknownst to me until I had to replace a broke pass. Axle and hub!! Sure as hell was a beast turning in 4x4 too! Let us know which Way u go.

My Sammy has been Fozzy Locked for a very long time.  It works great.  Welding the diff is not rocket science.  Failed weld ing is usually caused from over heating.  Just weld the side gears.