This one has been beat to death, and sadly, I never got to finish my work on it before I sold 0723. Now the test mule (complete with my custom made TOD eavesdrop harness) is laying dead behind a BMW dealership in Anchorage...

The E-clutch that engages the TOD is activated by a modulated voltage -NOT direct current. While DC will lock up the clutch, engaging the front driveshaft, it will also burn out the e-clutch over time.
You might be able to search my gallery for photos of the TOD computer in operation (look for the o-scope pics).

In order to have reliable 4hi, you need to generate the 88% (iirc) PWM signal that simulates the TOD computer's signal, and send that to the blue wire.
Google "DC Speed Controller" to get an idea of how PWM is used to control inductive devices like motors and clutches.

A few of us got a long way into figuring this out, and we pretty much had the solution on paper. Picture a knob, that allowed you to dial in the exact amount of torque you wanted to go to the front axles. Pretty cool.
However, no one really managed the jump from paper to reality for whatever reason.
Mine was a lethal combination of laziness and wife.

There are also two huge reasons that this knob solution never took a priority:
1. The Ball Ramp Mechanism. The original purpose of the TOD controller was 2hi, not just 4 hi. Two-wheel-drive has all kinds of practical daily benefits, not just the occasional mud run. Unfortunately, even with the blue wire disconnected (toggled), there is a mechanism within the Borg-Warner T-case that still transfers rotation to the front driveshaft. The e-clutch simply modulates this rotation to create torque. Tone discovered this phenomenon on a 2wd dyno, with disasterous results. So, unless your front wheels are suspended in the air (no friction at all), 2hi is unobtainable.
2. TOD is awesome. There was an army of engineers behind this one, and us lowly mortals could never improve its function. The truth is, that with a mechanical T-case, there is no way to reliably control it's doings from the driver's seat. The DCCD in the Subaru STI is on a viscous center diff, like the Evo -this is not a mechanical transfer case. I know that the Baja VXs have a torque controller (at least you can see the knob from the pics), but they also have a warehouse full of spare parts...

So, Tad's solution on PI is great, but use it with care (just like the owners of Air Lockers do). If you leave it on for an extended period, you will break something -it's about the size of a hockey puck and it's buried deep within your transfer case.

Not finishing the TOD speed controller has been one of the greatest automotive letdowns of my life. I really wanted to finish this one up, if only to say it was done.
I still have all of the files though...