Don't want to beat a dead horse, but.................
If I just patch the hole with JB weld, will the hole continue to grow? Will I suffer some major failure if I don't put the upgrade kit in and get a new housing(housing being optional).

the hole will re-appear or it will produce another hole somewhere else . must keep the oil up to level or major damage will occur. charlie

Depending on the inside damage to your transfer case, JB Weld may or may not work. It is possible if you address the issue A.S.A.P., you may only need JB weld and one of the fix kits whether it be a Merchant, Kennedy or other brand.

On another note, do yourself a favor and add what type of truck you drive so others can help with a problem.

I JB Weld'd my hole for about 8 months until I had an opportunity to install Merchant's fix (and a new rear case).

Another hole may appear though as Charlie B mentions.

See the link below...I have pics of the hole as well as the innards of the t-case showing another hole ready to birth and the fix.

http://www.dieselplace.com/forum/showthread.php?t=338631

A Good 2 Part Epoxy bought me 10 months, but I applied it THICK!