Yeah...obviously, the "2WD MOD" requires both a 2WD t-case AND free-spinning hubs. Most of us that have done some sort of axle swap, already have the hub situation taken care of (lock-outs). But we still need some sort of t-case with a 2WD mode. Finding a t-case with a passenger-side drop is not the issue...finding one that will work with the H3's electronics, is. Given the task at hand...I think it might be easier to mod the stock t-case to yield a 2WD mode, than it would be to adapt some other t-case to work with the electronics and fit the H3.
I have not had the 4494 apart yet...but I have a smoked one sitting here on my work bench, awaiting a tear-down. I cannot say for sure...but I believe the H3's "variable f-to-r torque split" is done via something mechanical and not done with any sort of electronics. I say this because when mine started failing...I never got any sort of dash light indicating something was wrong. It was just harsh mechanical binding and grinding. So, whatever dohinky controls the variable split...I think it is entirely mechanical. Thats good news for doing some sort of mod. Whatever the case (no pun)...I think the "electronics" of the H3 t-case is limited entirely to the selection of the mode. The encoder motor clearly rotates a shaft to switch modes...but I don't see any other sensors or wires that would be used to control or vary the output to the front shaft....and I also don't think the encoder motor is actuating anything by itself (it seems to only work via the buttons on the dash) as you drive down the road. So my theory is that the torque sensing and variable output is done entirely inside the case via some sort of mechanical system. I could be wrong on this but, its a hunch I got.
My plan is to leave the encoder motor alone...leave the shift forks alone...and somehow swap out the variable front/rear drive gear (4HI-Street mode) for a fixed rear-only drive gear. I have no idea how to do this but, it seems this might be the easiest path to a 2WD case. Essentially the 4HI-Street button on the dash would become a 2HI-Locked. You would loose the variable f-to-r mechanism that the H3 normally uses in 4HI-street mode...and you would be left with a traditional 2HI-4HI-4LO case like everything else uses. My main concern after reaching this point would be to make sure the truck can drive down the road without lighting up the dash, and all the traction systems work correctly. Then my secondary concern would be the longevity of the t-case itself. Shutting off the front output shaft means the that the rest of the t-case must be able to freely spin and operate the rear output...but safely let the front output remain motionless, without burning something up. Not sure what kind of lubrication issues I could get into...probably depends on how the variable split dohinky works.