Drupal function to convert node into Json object
To return on menu callback function in Ajax call you can use drupal_json_output(), you can use this function as an example. 

On that exampe you can see that you only need to call drupal_json_output() function with the object as the parameter, there's no need to return anything from your callback function.

If you need to convert the Drupal node object into JSON object to be returned on a function, you could consider to use drupal_json_encode()