Boy, talk about leading yourself down the proverbial rabbit hole. I'm going to my stack of spare cases and such and pull apart some retainers and adapters and see just what clearances I'm dealing with. I have been researching tons, and I'll lay it out here in case it's useful to someone in the future.
JB Conversions feels that 1 1/2" engagement of the splined shaft is adequate. This is on a smaller 27 spline shaft. They also believe maintaining the hubcentric portion of the adapter is important. Likewise, Novak believes maintaining the hubcentric portion is important.
A 3/8" clocking ring does not allow the hubcentric feature of the adapter to engage, therefore the adapter is centered by the 6 studs protruding from the clocking ring. This can allow for minor misalignment and added stress as the studs carry all the weight, side torque, and rotational torque. The torque issues could be mitigated with another mount at the rear of the transfer case. The misalignment issue would probably not show up on a dedicated wheeling rig, but on a daily driver my concern is that even a couple thousandths would lead to eventual bearing or shaft failure at just the wrong moment on a cross country trip.
Potential Solutions:
Novak makes a 3" adapter with a replacement input for the Jeep/Dodge 241 to a 4L80E. This is the most expensive solution at $528. Not a deal breaker but I really don't want to tear down the transfer case a second time to replace the front input. That is if I can even get it to clock correctly...
Advance Adapters makes a few pieces that might be useful. This would run about $325. They have a 1 1/4" 4L80E to Atlas adapter, and a 1" clocking ring. This would actually allow full spline engagement and be a bit shorter than my current factory adapter. The issue here is the size of the bearing retainer on the Atlas is larger than the 241C, I would have to machine a ring spacer to take up the extra clearance. Plus the front adapter piece uses silicone instead of the factory o-ring at the 4L80E tailhousing. I don't really like that.
Another idea would be to use a 241D case with my 32 spline GM input and JB SYE. The Dodge case is already clocked up higher, but the bolt pattern is Jeep so the clocking is all off. I could turn my GM adapter 90* and make it work or buy the Novak or Advance casting. This could add up quickly, as the castings alone are $400-500. Best part is the Dodge case would leave the shifter on more of a vertical plane as opposed to the Chev case.
Lastly- make friends at the machine shop. I could either have a bearing retainer made with a 3/8" higher shoulder to allow a clocking ring. Or go nuts and have an integrated bearing retainer/clocking ring machined. Or have the factory GM adapter welded up and redrilled to the position I need.
Stay tuned!