Pending transfer case failure

'08 CX-9
We have a 2008 cx9 with 165,000 miles. It's been trouble free except for 1 fuel injector and 2 failed wheel bearings. Last week it started making a rumbling sound in the right rear which the dealer diagnosed as another failed wheel bearing.

Unfortunately, while it was up on the lift, they found a shocking amount of rust and said the transfer case is failing too, which they diagnosed by twisting a shaft and find there was too much play. The cost to replace the transfer case would be $1700, assuming they did not run into other problems. They felt it likely to find other problems given the amount of rust and therefore were giving the impression the car might not be worth repairing.

If the transfer case did finally fail, would the car still be driveable or is it going to leave us stranded somewhere? I plan to change the wheel bearing myself, but transfer case is way out of my league. Would changing transfer case fluid potentially prevent complete failure?
There are threads on this forum about completely removing the transfer case and drive shaft thus converting the vehicle to FWD only. I'm not sure if this is an option you want to consider, but it does seem to extend the useful life of the vehicle if you can live with FWD only.
'08 CX-9
Thanks for the reply rowlands57.
Is removing the transfer case necessary, or could i just let it break on its own and keep driving? What I mean is, will the transfer case finally letting go influence how the car drives at all other than loss of all wheel drive?
If it goes and takes the output splines from the transmission with it then, in theory, you 'should' be fine. Basically, if the output shaft is no longer trying to spin the gears in the PTU there should be no further issues. This is not based on personal experience but based on reading other threads here about the typical failures of these units.

Some folks have had the splines go on that output shaft so even adding another new PTU would not solve their issues. Those faced with that had to replace transmissions as well in order to re-establish the connection between the transmission and the PTU.
Yeah, what he said, if there is rust it might be the splines that go out, once everything explodes than you are good to keep it running in fwd. You shouldn't have any problem but it is highly unpleasant during winter if you have snow.

No need to remove it, i removed mine because i wanted to know if it was the splines or the transfer case itself. Since it was the splines, i never reinstalled it.