I drive mine like that (switch installed) regularly, as a preventive measure: I do not have the problem. ESC and ABS are still alive. NO problem other than the "slip" light on the instrument panel, that disappears when I turn AWD back ON. FOr the rest, it becomes a FWD, period.
However, the condition you..and others...have described in a similar way, makes me puzzled: if pulling the fuse clears the problem, it means the coupler itself, I mean the clutch components, are then electrically de-energized and act accordingly. SO the problem is not the clutch itself, but the elements that keep it energized when it should not: OK they are "part of" the coupler system (pressure sensor, hydraulic pump motor, ....?) and are part of and replaced with the replacement of the whole "coupler" , thus clearing the problem...for a while, it seems from reports that the problem comes again later. IF my question here proves true, it could mean that my "coupler saving" solution might not save the problem in the long run (unlesss it also saves the crappy electronics) . Fact is, KIA (Hyundai) DOES have a problem, since it repeats itself systematically, maybe not for everyone, but in the same way for all those who are plagued with it. ANd their only admission that there is a problem is that they replace the coupler.. they correct the result, not the cause.
Now that I read about it, it seems that I had multiple factors that encouraged the issue to occur, I have same size tires but with different manufacturers and different tread depth, I didn't rotate them for a long time, and when I did the drive was uncomfortable I had to switch them back! , I had what I believe now a poor re-alignment done. I'm glad I found a way to protect my car from further damage. I do hope that there is no extensive damage done to the drivetrain, there is no way for me to know until I change all tires, re-align my car and maybe replace the coupler.
I agree with you that this is an actuator which should be normally off, it is odd that it would go on all the time especially if it is broken, if something goes wrong like in my case -because of the tires-, then it should be the module sending false signals and the problem should not go away once the coupler is replaced. Not to mention that there should be a warning light when it crosses a certain threshold. Also, it is inconvenient that the switch doesn't have a completely off mode, the car becomes more responsive and alive when AWD is completely off but the back feels like a dead weight that is dragging behind you.
By the way, I'm curious now, Is there a kit to install the off switch? Is it done through the fuse box?