Jim - I didn't take it as though you were hanging it on me; no issues there, my friend. Just wanted other people to know that I was quoting my source, and not taking that stand myself.
I tend to agree with you on the heat/evap thing.
To be fair to the source of the whole "use engine oil" thing, here is a link to his article:
http://www.rsgear.com/technical/articles/2007_03.pdf
I'll let you all read it and see if you come to the same conclusions I did.
He makes a lot of claims, but nowhere does he discuss details such as how "hot" is hot, how many failures he's seen, how much "maintenance neglect" played into the failures, no disucssion of lube properties, etc.
Another thing that I find odd is that if he's so convinced that using engine oil is "better" than ATF, then why the need to overfill by 50%??? He advocates using the engine oil because he believes it will resist evaporation "better", but then suggests overfilling the t-case to 3 qrts instead of the normal 2 qrts. If engine oil is the "solution", then why the need to over-fill? In other words, he's taking a "shot-gun" approach and throwing all manners of possible solutions to this, and not addressed the root cause; that of poor maintenance practices. If engine oil can solve the issue, why over fill? If engine oil will also evaporate, then I suppose you could overfill, but that would not stop the issue, it would only delay the point of running dry. In fact, if he advocates 50% more fluid, why not 50% more ATF; why the need for engine oil? To me, he is simply "swagging" it, and it shows in his complete lack of logic to the approach.
The 261/263 t-cases don't run any hotter than the rest of the rig, overall. When I was pulling my travel trailer a few years ago, across SD in the searing summer heat, I had the "normal" ATF in my Allison tranny, and in my t-case. When I stepped out to fuel up at a station, I got a small second degree burn on my bare leg from the cab-step (aluminum aftermarket) as I brushed my leg against it stepping down past it. (ouch! - lesson learned). It occured to me how hot the underhood air is. All that heat soaks into the drivetrain (tranny, xfer, etc) and all the way back, as evidenced by the fact that it can heat up the running boards that much. And yet, I had to issues with the tranny or t-case fluid levels during of after that trip. It's reasonable to think that during long heat soakings like that, all the drivetrain is near the same temps. The engine ran around 210 deg F, the tranny at around 190-200 deg F, and it's reasonable to think the xfer was right around the same. While hot (as my leg can attest), that really isn't "HOT" compared to a tranny. If the ATF can adequately protect the tranny, then it can adequately protect the xfer case. The rate of evaporation (probably pretty low, actually) is the same, because the heat is the same. What might vary a bit is the level because of total sump volume. The xfer case does not hold near the volume that the tranny does. Half-quart loss in the xfer case is more of an issue than in the tranny. (xfer case = 2 qrts volume; tranny is probably 12 qrts total volume). But the RATE of evaporation is the same, given the same heat load. As long as one checks the fluid leves with reasonable frequency, the equipment should not run dry.
I have since swapped in Mobil 1 ATF into the xfer case, and AutoTrans-5 (DA lubes) into the Allison. I simply wanted both a bit of temp protection, but also longer service OCIs. I still check the fluids annualy, but I don't change them (figuring on 100k for both). Perhaps they may eventually need a top-off, but I don't see a change due for quite some time. So far, I haven't needed a top off of either at all. BUT I STILL CHECK THEM!
My engine oil level typically drops about 2 qrts over an entire year (mostly after those hot summer pulls). That 2 qrt range represents the "full" down to "add" marks on the dipstick. I never add fluid; by the time I get that low, it's time for an OCI anyway (fall of each year). Also, added fluid would skew a UOA; I like to know how the oil ran without virgin help. If it ever got below the "add" mark, I most certainly would do the right thing and top off, but it never does, so I don't see the logic to the added expense of the top-off knowing an OCI is right around the corner.
My point is that fluid levels are the responsibility of the owner to keep track of. There are times when it's easy (dip stick, sight glass, etc) and times when it's more involved (pulling a level plug for a visual inspection such as the diffs and t-case). But in no way is the fluid level ever a fault of the lube. There isn't an owner's manual printed today that says "ignore this until it runs dry". There are some "fill for life" pieces of equipment, but I assure you if that is the case, the OEM did a LOT of statistical studies before they felt good enough to put that in print. The GM xfer case in question is a piece that is to be maintained, and fluid level checks and exchanges are "routine" PM as defined by the OEM.
I highly suspect that if a person used 5w-30 motor oil in those same t-cases (rather than the spec'd ATF), and neglected them to the point where they ran dry, the same ugly demise would have been the end result.
Also, to be fair to Weinberg, I've not heard of people having failures using engine oil in lieu of the ATF. OTOH, perhaps their extra 50% oil hasn't yet evaporated and/or they check it more often ...
Want some grand irony? The GM xfer case calls for ATF, and some people go "off the reservation" and use engine oil. Yet, there are some Harley riders that swear by the use of ATF, rather than the spec'd lube (essentially engine oil), in their primary cases. Talk about your "grass is greener on the other side" approach! Both cases are essentially link-plate chain driven boxes!