You might check with Sean at Aftermarket 4X4, T. I had concerns about the housing on my transfer case and the fact Chevrolet doesn't even show a replacement for them. Sean mentioned he has 5 spd parts avaialble. Possibly he has a complete tranny. Between replacing with a 5 spd or auto, I'd go the 5 spd route if possible.
Mine is a little tricky shifting into 3rd gear. Had me wondering if mine has a worn fork, synchronizer or something. I've worked on Muncie T-10 trannys when I was MUCH younger. If I have to attempt a repair on mine, I will. But definately not looking forward to it. I'm with you, I don't know why area transmission shops don't want to work on "these" trannys unless they are just concerned about damaging one while spliting the cases.
Norm