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With the preasure the trans makes I don't think it can go that way. Now ATF in the 205 can and does happen. Just make sure you have a good seal and you'll be fine.
Never had gear oil in the tranny but when I picked up my NP205 I was surprised to find ATF fluid in it. I pulled it from a 72 for my 78. I guess it doesn;t hurt to run ATF fluid and I figure it would prevent any problems if the fluids mixed.
some people dont know what goes in so any oil does at the time. that tcase that old should be gear oil. and just change the seals while out. you dont want to swap it out again any time soon as its big and heavy.
here in the army thats what we put in the HMMWV's transmission and tranfers is dextron 3 (ATF) works just fine i dont know what kinda transfer they use but ive never seen a problem cause of the ATF
Never seen that happen, usually the other way round, but you might want to check the vents on your transfer case. May be plugged allowing pressure to build, pushing gear lube into tranny.
all 205's same in side . so atf or gear oil as you wish. just run it like you would and check to make sure case isnt over heating . if so might want to run gear oil.