Yea, I am not convinced on filling the diff to the fill hole. Exact same known issue on Chevy 1/2 ton diffs. 2002 is mine for example. The fill hole is above the pinion seal and if you fill it to the hole it increases the chance of puking that seal. Seal is happy holding back splash oil, but not oil 24/7/365. Book says 5/8" to 1-5/8" inch below the hole. I do 3/4 which is a perfect 2.0 qts. To the hole is 2.5-2.8 qts. If your saying the fill hole is above the axle seals then I might stop at .5 ish and just do more often. 16oz is a pathetic amt of oil for a diff though, wowDumb question here, but for the transfer case do you fill it until fluid comes out the fill hole or is there some other procedure for determining the proper fluid level? Reason I ask is I filled it until it leaked out but the axle seal is lower than the fill hole and I'd hate to put too much in and cause that axle seal to leak. If anyone can let me know so I can drain as needed I'd appreciate it. I can't find any info anywhere else on the subject.
Edit: I see 2 posts above says it should be filled to the top but want to confirm 100% you are talking about the transfer case too. Replacing that seal will be a b***h if it pukes.