If I recall correctly the term appears in the Gen2 owner's manual - I'm too lazy to go out to the car to check - but if I'll try to remember to check it when I go out later.
I do believe that the pneumatic setup IS solely to allow SOTF and I will attempt to explain why - I would also point out that, this is just my opinion, and should not be taken as a statement of Suzuki's intent.
Since you have both generation vehicles, and presumably easy access to both owners manuals, I will ask you to check your Gen1 manual - I believe you'll find it contains a recommendation that you bring a vehicle equipped with auto hubs to a complete stop before shifting from 2HI to 4HI, for one transmission type (auto or manual, I don't remember which) and you will also find that it instructs you to stop and reverse after shifting from 4HI to 2HI to unlock the hubs. (For me, getting access to a Gen1 owner's manual means going over to my sister to borrow hers, and as I explained earlier, I lack the motivation to do anything on this sunny Saturday morning.)
At this point it should be quite clear that manual hubs or automatic hubs, a Gen1 requires you to stop the vehicle and either get out to lock/unlock the hubs, or stop and backup - putting an end to any discussion on shifting on the fly.
Check your Gen2 manual now - I believe you'll find it allows shifting from 2HI to 4HI and back, without stopping at speeds of up to 60 mph, provided the front wheels are in a straight ahead position - if the vehicle had either manual or auto hubs - you would be required to stop (just as you are with a Gen1), so Suzuki had to find a way to engage the front hubs that did not require stopping - presto - the air activated (pneumatic) free wheel disconnect.
And for what it's worth - I do recognize that with manual hubs you can, provided you remembered to lock the hubs in advance (assuming that you knew in advance you were going to use 4WD) shift from 2HI to 4Hi and back, making the key change that enables shift on the fly the sychro in the transfer case - however - shift on the fly would not have been possible without some form of automatic freewheel mechanism that did not require bringing the vehicle to a stop.
YV/MV