the transmission is a 4L60-E and last time I checked on the earlier 700R4s, the output shaft was different on one destined for a transfer case application, so I don't believe you can just pull the tailhousing & slap on a transfer case. I don't see any reason you couldn't use a 4L60-E from a newer 4x4 truck, though. The reason the earlier trannies don't work on an LS1 is that the crank flange is a different distance from the bellhousing mating surface than a Gen I or II SBC.
As far as wiring, stick w/ the OEM harness stuff, trim out the unnecessary wiring from the harness (late model f-bodies have all the front end harness & ECM harness together.) Painless does not care if your engine runs as intended, they just care that A - they sold you a harness and B - you're not on the phone because of service engine light. If you want it to run right, do what is necessary for it to have the same wiring, sensors, etc. that are in the vehicle it came out of.
I'm going to use this smilie because I like it /forums/images/graemlins/deal.gif
Matthew