I never did get to see the actual damage to mine. But from the sounds of it, it wasn't nearly as bad. Just some small chips in the teeth from what I was told. I was actually able to drive it for about a week before I took it in. There was just a grinding noise whenever I let off the gas.
They originally noticed some wear on the t-case and rebuilt it. Then once it was put back together they noticed the front diff. Not sure if its all related.
And I purchased mine in early July '05 so it was probably a June build.