I recently installed the new calmini 6.5:1 DL gear set in my 87 transfer case. While it was apart, my buddy made the mods to the shift fork to enable the 2-low feature. The picture shows the stock shift fork rods. Notice that they both have the same length 'notch' cut in them.
This picture shows how the shift fork is modified. The front shift fork (the one with the collar), or the fork that selects 2WD and 4WD has the 'notch' extended by exactly 0.315 inches. The cut extends towards the back of the fork or towards the weld bead.
I have been told that this can be done by an angle grinder, but we had an end mill handy
Correct on the ball removal. Regardless, either way requires the ball removal. The mod. that does not modify the fork requires a different alternate 2wd low pattern in addition to the normal pattern. Never seen/used the mod shift fork version, told it was easier to use.