Hmmm I don’t think it does engage the front cad but it’s been so long I don’t recall for sure. I thought the 4wd light turns off when in tcase neutral and back on when you get to 4L.
IF it does engage the CAD, then yes shifting with the motor off would not engage the CAD.
I’m pretty sure the CAD is not supposed to be engaged with tcase neutral. The reason being the tcase neutral is not true, the front and rear outputs are locked together in N. If the CAD were engaged while the tcase outputs were locked together, then the wheels would be locked together like 4wd and wouldn’t make turns smoothly. I think the whole reason they didn’t care to give the tcase a true neutral is because they had the CAD to break the connection so the outputs could be locked together but the wheels not bind when rolling. Then when the TJ came out they made the 4wd system always turning but the tcase neutral became a true neutral so either the front or rear axle turning the tcase at different rates didn’t matter.