I towed with a 98 Explorer XLT 5.0 AWD for 2 years until I got a 06 Explorer Ltd 4.6 4x4. Comparing the 2 same chassis with similar engines I observed gas economy did improve because it was driven in 2wd mainly unless 4x4 automatically engaged when rear wheels slip. I also gain turning radius because I believe the front wheels turned tighter.
I prefer AWD because it is always on especially for when wife driving. The 4wd on Explorer just had auto 4wd hi and 4wd lo setting. It didn't have a 2wd only setting like my 03 Lincoln Navigator to lock out automatic engagement. When placed in auto the 4wd would engage with a jolt but I didn't have any failures in 80K miles of use.