It seems like fewer and fewer vehicles are coming with a 2-speed transfer case anymore. Do you think the traditional 2-speed transfer case is a dying breed? What will replace it? Or will it just continue to shrink to only a handful of models that offer it?  

It's just going to be a handful of models that still offer it. I hope Jeep kills off the Compass and Patriot, and focuses on REAL off-road vehicles with true 2-speed transfer cases. But there's no question there's fewer and fewer models that offer it.  

with all of the fuel restrictions and smog laws that are sure to be implemented in the coming years i think that we are unfortunately looking at a dying breed. So few auto manufacturers are still offering them that i think it will become an expense that they can no longer afford.

however, the 4x4 aftermarket is more than ready to handle such an occurance with multiple purpose built cases available and there are still scads of used 2-speed t-cases in scrap yards that are sure to be viable swap candidates. basically, it will become a little bit more difficult for new vehicles owners to obtain but 2-speed t-cases will live on even after the auto manufacturers cease including them in production.  

Transfer cases with high and low range will continue to be offered in trucks and utility vehicles that are meant to really go off-road.  I believe we'll see more shifting options, such as electric solenoid shifter, but the 2-speed T-case isn't dead.