The electronic transfer case is just as strong as the manual shift case (they are both Borg Warner 13-54 units). The internals are mostly the same between the two versions. The main thing that annoys people is the electric shift motor. There is a stop with a soft bushing surround in the shift mechanism that it bumps when returning to 2WD. Over time the stock bushing cracks and crumbles or splits, the shift motor rotates a touch too far, and it gets "lost" and spazzes out, usually leaving you stuck in 2WD. Maybe you know all this. Either way, aside from that the shift motor is very robust. It is well sealed against water along with the electrical connections so water crossing isn't an issue. I wouldn't change to a mechanical shift case just because of a motor that needs attention once every 10 years. The last shift motor I fixed, I used a chunk of rubber tubing to fix it for good.
I do have a mechanical shift case in my current Explorer. It works alright but isn't without its own annoyances. The shift linkage is touchy with adjustment, it currently refuses to engage at a standstill like it used to, and I know once every 10 years I'm probably going to have to replace the shift fork wear pads.
For recommended upgrades, I would suggest upgrading the fluid cooling on the A4LD with an aftermarket cooler. You could put a big bad stacked plate cooler replacing the stock one, or run a cheap tube/fin unit inline with the stock one - both methods work well. Add a trans temp gauge. Install a Transgo SK-A4LD-Jr shift kit and all the Sonnax upgrades you want, your trans will thank you. I like the Sonnax main valve and the oversize governor weight.
Other upgrades... hmmm.... I did a disc brake rear axle swap on one of mine. It was easiest swapping a complete 2nd gen disc-equipped axle right in, as opposed to piecing it together. I got a free L/S and gear change out of the deal. Only had to change the master cylinder. Was it worth it, and did I get stops on a dime? Not really. But it worked. I liked it. I was more impressed with the Dorman Speed Bleeders I installed.
Consider some upgraded sway bars for improved street manners. I assume you'll install disconnects anyways for offroad. I have Explorer Express units which are discontinued, but Addco should still make an affordable upgrade set. Truck responds well to sway upgrades. I also have stiff Edelbrock shocks and Moog poly bushings; the combo makes my 2-door really carve corners.
If you like working out of the back of the truck, consider putting power back there. I installed a 12v cig lighter jack in the rear cargo area with a retractable work light years ago. Very handy even with just 10A. Now I also have a 12v line run direct to the battery positive (40A fused) using huge wires. It powers my sub most of the time, but is on a quick disconnect so I can hook up an inverter or other high drain equipment anytime.
Also installed a retractable work light under the hood. Has come in very handy. Extends about 10 feet. Want one? Go to a junkyard, look under the hood near passenger inner fender of late 80s/early 90s GM trucks.
Other mods... 130 amp alternator works great. TYC makes an affordable brand new one.
BBK makes a throttle body. I have it, it's not worth the money.
