Sounds like a good plan. If the TC is "stuck" in neutral, you should be able to find out if it's internal or external by attempting to shift it manually, if it comes to that. With the encoder removed but electrically connected, you should be able to confirm its function (it moves or it doesn't). Make a note of the position of the shifter and encoder before moving anything. They'll have to be matched upon reinstall. If you replace the encoder, it and the TC need to be in neutral position, or they will cause calibration issues with the logic at power up (according to the manual).

315K miles, primarily as a plow truck, is a pretty good test of the transfer case. I wouldn't be surprised if you find it's due for overhaul. Overhaul kits are available and relatively inexpensive for DIY. Remans are spendy, while wreck take-outs are generally less than half the cost.