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Yes the 656 is a screamer, the LDS in it is turned way up to 200 horsepower and the Allison seems to keep it around the redline 2800 rpm most of the time you are on the throttle.
Sounds like time to do some surgery on it, if anything besides a tapered roller bearing is shot, your best bet is the ebay unit you found. Nobody is going to have parts on the shelf for that very unique transfer case.
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