Here are some before and after pictures.  Note that in the after pictures, I still need to sandblast and coat the front wheel drive shift lever (shown in picture, but rusty).  The picture in the top right is after some initial cleaning and before removing from the chassis.

I completely rebuilt the transfer case using all new bearings and gaskets.  The aluminum case was cleaned, and then glass bead blasted:

The steel parts (parking brake drum and backing plate, output cover, front output flange, rear output bearing retainer, etc.) were all coated with POR15.  The rebuild went well, and I was able to make do with the tools I had on-hand.  I used both the Toyota Chassis and the Haynes manuals.  I used a Speedi-Sleeve on the front output flange.

The transmission proved to be a major hold up.  The original tranmission seemed to work well, so I planned no major work to the internals.  I replaced the gaskets and front seal and reinstalled.  Once I filled it with gear oil, it was apparent that the case had two small cracks.  It seems rolling off of a cheap transmission jack will do more damage than you think...

I obtained a used transmission from a local STLCA  member.  It appeared to be in good shape, with much less wear on the output shaft than my original unit.  I cleaned it up, put on a coat of paint, replaced the seals and gaskets, and installed it.  After it was installed, a large amount of play was detected in the output shaft.  (I know it sounds stupid, but the play wasn't apparent before it was installed along with the transfer case.)  I determined that I had a bad output bearing.

I purchased a transmission rebuild kit and successfully rebuilt tranny #2 with standard hand tools.  The one tricky part was pulling the rear output bearing.  Unable to find a suitable puller (except for a pricey Toyota SST), I improvised with a simple solution.  I used a punch and hammer to break up and punch out the ball retainer cage inside the bearing.  Once it was out, I could work the ball bearings themselves out.  This provided enough clearance to lift out the gear/rear output shaft assembly. 

Finally, I had good rebuilt  transmission and transfer case assemblies installed and filled with gear oil.