EDIT: unless you can find a way to change the front springs so that they arent hanging over the tires, i dont think youll be able to get taller tires on the car.
http://www.stealth316.com/images/vr4cutawayabove.jpg
As far as the transfer case, ive hit the limiter in 4th many times and never had an issue. but i also dont have a vent on my transfercase. when i bought the car it was missing so i just stuck a rubber cork in the hole to keep dirt and stuff out. by the time the car was street-able i had completely forgotten about the rubber stopper and drove with it plugged for quite a while. no issues yet. although i like the idea of a breather tube much better.

