Sorry Gang...i should have completed this thread but got sidetracked dealing with getting everything back together and forgot to keep y'all updated. It took about six weeks between ordering parts waiting for windows with my mechanic, and working up the food chain. Ultimately it turned out to be faulty solenoids that caused the whole thing, but we'll get to that.
So... Damage was ultimately done to the rear diff and everything it contained (literally a nickel sized hole blown through it), AA adaptor (loosened but fixed with heliocoils), speed sensor, solenoids and rear driveline. My mechanic and I started with the rear, knowing it was smoked.
I ordered a complete 3rd member (with ARB differential installed of course) from Curt
@cruiseroutfit and I'll be damned if he didn't get it to me in a week. My mechanic commented on both the quality of how the differential was built and set up and also the quality of all of the parts included, down to the axle seals.
After installing it and having the rear driveline trued,
it was time to see if the damage extended to the transfer case. Detecting some weird play between the transfer case and trans, we determined the bolts had worked loose on the adaptor and one of them was cross threaded. Working through that yielded the benefit of knowing the transfer case was indeed in great shape.
After that, it was time to put it in gear and see if the transmission would perform. We knew it could at least reverse. A quick test drive and I knew I wasn't out of the woods yet... It stayed in 3rd gear (like it did when I thought it was stuck in gear and blew it up originally). New solenoids installed (did all three) and she was purring... Until she wasn't.
Now she'd suddenly "drop out of gear" but then reingage. Fearing the worst, I drove it straight back to my mechanic who quickly diagnosed an issue with the speed sensor.... The ECU was getting intermittent speed readings but would then suddenly lose it, causing the tranny to go into neutral. After taking the transfer case apart agian, we realized the GM speed sensor had become loose. We ordered a new one, slapped it in and prayed that was all.... And it was.
She's been trouble free and running great ever since. I have a lokar shift kit as my next project and aim to get that in in my free time over the next few weeks.
All is well that ends well... After a few grand. Fortunately my mechanic is a both a buddy of mine and an excellent professional which made the process both cheaper and faster. Lesson? Fix your solenoids and don't force a rig into reverse at 65mph.