And this isn't just a Titan issue. I bought my first 4WD in 1979, a new Jeep CJ-7, with manual locking hubs and manual transfer case (3spd manual trans) and found out early on that all of the stress had to be off the drive train to easily shift the transfer case in and out. It's been that way on pretty much every 4WD I've ever owned, and I've had a bunch of 'em over the years. My last truck before the Titan was an '02 Tundra 6cyl with a manual transfer case lever, and it had the same issues. That alone isn't a dealer repair issue. Now... if it won't switch out of 4WD when you're stopped after jockying a foot or two back and forth to relieve the "bind" in the system, then you've got problems.
The key is to get the "bind" out of the system (transfer case, half-shafts, hubs) and it'll drop out. If you're driving at highway speed, switching between 2hi and 4hi, and the light blinks for your front end, it just means that the axle is still engaged, and when you switch to 4wd it will be powered immediately.
Roger