From 4WD to 2WD. Leaking Transfer Case - Do I still need the transfer case? CX-9 2010

If you have a minute I want to get your quick thought on something that might sound crazy. I am the 2nd owner of a 70K miles Mazda CX-9 GT from 2010.

My transfer case (TC) was leaking and upon verification the dealer said the output shaft failed and I lost 4WD. After trying to sell me a new car or a new transmission, the dealer said that I should have no issues driving the CX-9 as 2WD automobile and put back the TC. The dealer did not care to reseal the TC and I have a leak again. Going back to them they did not bother looking at the TC and they say I need a new car, or a new transmission and transfer case.

Here is the question: Once I permanently turn off 4WD, can I just drain the TC so I dont worry about risk of fire (the TC is by the exhaust and its known for potentially causing fires)? I assume that if the TC is not just for 4WD than this wont work.

Any thoughts on this?
if you drain the TC (which you can't because there is no drain plug) the gears will still turn and they will get hot and eventually the TC will explode because it will seize. Your best way is to completly remove the TC, yes car will still run, i have done it as plenty other people, do a search here. You just take it out and put back the passenger side axle and remove the main drive shaft completly.
if you drain the TC (which you can't because there is no drain plug)

There's no drain plug, but there is a fill plug. PITA to get to, but it's doable. Then you use a vacuum to evacuate the goo. This only works if your fluid isn't completely cooked, which I suspect it is.

One option -- depending on how much you're willing to spend -- is to find a good transmission shop and get a quote to rebuild your tranny and install a new PTU. My 2011 AWD had 90k when it started feeling odd as I drove. Took it to a local, reputable shop. Confirmed the PTU was toast and it took out the tranny with it. The splines were ground down.

And the AW21 transmission has issues with the bores in the valve body experiencing a high degree of wear. Don't know if that's related to PTU failures, but it's worth seeing a transmission shop to drop the pan, swap the fluid, and at least inspect the valve bodies. My transmission guy said he's not seen one valve body without valves that are worn out. Usually he's had to replace the whole thing. He has a bunch of dead PTUs and valve bodies around for show and tell. Also the B1 servo pins fracturing, causing slips.

Maybe split the difference and get your transmission rebuilt and nuke the PTU. It was 2800.00 to rebuild my transmission and my cost-benefit analysis led me to make that choice. I'm keeping mine for at least a couple of years. 2800.00 is less than a down payment, my car is a known quantity, since I know exactly what maintenance I've done, no car payment.
if you live in a warm climate and never do any off roading than taking it out is probably your best solution. Easy, you need to remove the cat converter which is the hardest part but honestly it is not all that bad, you will probably need new exhaust gaskets but that's it. Any independant shop can do this, don't need to pay the big $ at the dealership.
Thank you both @DudeInPHL and @puma !
I live in the Pacific North West. Except this summer its rarely hot, we get a lot of rain and occasionally drive to go skiing for a couple of days.

Same here, I dont have any payments on the car and it just turned 70K miles and I think I am better off keeping the car even if the car market was less crazy.

I will call some shops and see what feedback I get.

@puma how many hours of labor would you roughly estimate for such an operation?
@puma I spoke today (via the phone) with a transmission shop and they dont understand how this can be feasible. I am not sure I understood perfectly their concern but it was something on the lines of the car not being able to function because after removing the TC the passenger axel shaft wont allow the car to run.. Not sure if this makes sense. Do you have any thoughts? Thanks so much... !
Yes, you can't see it but the passenger side axle shaft actually goes across the TC and hooks inside the trasmission so once they remove it, they will see it is doable. I understand their concern as I had the same but it does work.
I haven't had any problems with mine, you might have the rusted exhaust bolt which are a pain but other than that it is pretty straight forward.