thammel and I have been trying to figure it out:
http://www.explorerforum.com/forums/showthread.php?t=136753
Still not quite there.... it's different on the 3rd gen as it appears that it may need a feedback to the control to work properly. Simply interrupting the brown wire works, but causes the 4x4 light to blink (since it detects a malfunction).
Pickupman, the control trac 4wd is essentially 2wd until the rears slip. Then the solenoid automatically engages the clutch in the transfer case to lock the front and rear driveshafts. This feature, while nice for the average driver, can be a bain for off-roaders and control freaks like myself that don't want some brain-box determining when 4wd is necessary and would rather do so themselves.
Installing a switch in that particular wire interrupts the power to the clutch in the transfer case, thereby preventing the 4wd from engaging. On the street, you'll probably never know the difference. On loose surfaces, or in slippery and snowy weather, some people have found that the automatic engagement presents some disconcerting handling characteristics. (I, for one, find that it becomes tough to recover from a power-slide with the front end engaging and disengaging, but the opinions vary)
Off-road, there are times where it would be a benefit to have total control over the clutch. For example, in low range (or 4wd for that matter), it's a bad idea to turn a tight corner on a high traction surface. What that means for hard-core off-roaders is that should the need arise to maneuver in tight quarters, you have to stop, disengage low range, go back to automatic, make the turn, stop, re-engage the low range, and proceed. With this mod in place, you flip your 'brown wire switch' off, make the turn while in 2wd low range, then re-engage the switch, locking you back into 4wd low range. It's much quicker.
As an added bonus, it also gives you 2wd low range, as I mentioned above. Great for stump and shrub pulling when you don't want to tear up the grass maneuvering in tight quarters.
Hope that helps.
-Joe