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Why replace the Borg Warner? I much prefer the way a car with the viscous centre handles to an LT230. If you want to lower the ratio Tomcat Motorsport do a reduced ratio gear and chain kit for the BW.
http://www.tomcatmotorsport.co.uk/
Does the Tomcat kit for the BW change the low range ratio as well as the hi range? It may be an alternative to a pair of new ring and pinions to retain the low range speed with bigger tyres.
It is unusual indeed for the viscous not to fail solid. You might have stripped the splines - this is more likely if the box has done some work!