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the kid in that video can kiss his transfer case goodbye...

I should elaborate - the specific problem with this "switch" on the SRT is that you cannot guarantee that the transfer case motor has completely disengaged the clutch packs for the front. so you hit the switch, they are still partially engaged and you burn them out.

what is done for 2wd dyno runs on them is the transfer case motor which engages/disengages the clutch packs is temporarily removed.

as Shomegrown said, AWD systems differ. that is the skinny on the Jeep's...
 
Is there any harm in doing this permanently?
The ECU requires a special dyno mode for it to work. I do not believe it is a viable solution for everyday driving.

The potential engagement of the front clutch packs is related to how the AWD system functions. The front, as I understand it is pre-loaded electronically. And if the front clutch packs are somehow completely disengaged, they will re-engage automatically once you exceed 20 mph. This is, from what I recall as an owner and reading about it, very similar to how the Infiniti FX AWD system works.
 
You could also find a conventional transfer case (2HI/4HI/4LO) to swap in. I'm sure something from a Ranger or Explorer of similar vintage would swap right in.

This wouldn't be especially difficult to do, and it avoids the potential damage that can result from running some AWD transfer cases with no front shaft. You would also still have 4WD for when you need or want it.
 
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