scottladdy
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So, fully understanding that we are way off topic from the original post, one of the common misunderstandings is that ATF is solely a hydrualic fluid. While it does support that function, it also serves the function of a gear oil. Automatic transmissions usually have gears in them as well, subjecting the fluid to the same shear forces as non-hydraulically shifted transmissions. A transfer case is a transmission.This met with some resistance as well. Transfer cases had always had gear oil in them and a number of folks couldn't accept the ATF and switched out lubricants. Usually this resulted in failure.
There is also confusion regarding viscosities. People see a 90w gear oil and assume it is significantly thicker than a 40w motor oil. However, in reality they are nearly identical.
I would never use an ATF in a differential. Well, almost never as many front wheel drive cars with automatics have the diff "built into" the transmission case and share the same lubricant. However, for a typical separate differential that specs out a gear oil I will only use gear oil. The reason, the hypoid gears in a differential impart the greatest shear forces on an oil which can create "boundary lubrication". Gear oils have additional EP and anti-foaming additive packages which are designed to reduce that possibility. However, in a 205 or 208 transfer case I see no issues with using the specified ATF. Just make certain to change it regularly.