The overall idea of this rod is that it supports the weight of the transfer case to keep weight off the end of the tranny. Unsupported, the weight CAN snap the tailshaft right off the transmission. Ask me HOW I know this.
When I got my tranny rebuilt, my guy took what looks like about 1.25" rod and did just what you said. Flattened one end and drilled two holes (these allow it to be attached to the transfer case) and a 90 degree bend with one hole drilled in it (allowing it to be attached THROUGH the bellhousing into the block.
SO, that's what it does. I have some pix, but will have to down load them later, as my laptop doesn't have a card reader (older laptop). But it basically shows what I just described.
Steel rod, about the diameter of your thumb, the thick part, that goes from the bellhousing to the transfer case. In MY truck, it's the NP205, which is a much heavier transfer case. My M1009 does NOT have this brace.