This got buried but I'll keep it going in case anyone finds it helpful. Blinking 4WD lights seems to be a common issue, but the grinding noise doesn't.

Is it possible that there is less vacuum pressure available when the engine is idling in traffic, allowing a borderline-weak/sticky valve to let the front axle actuator PARTIALLY "slip" into 4WD?

Found this very helpful post from Scottie2113 - it sounds like I need to look at the "yellow dot valve":

"what I have found to be the problem most of the time with this is the two little solenoid valves that operate the free-wheeling clutch actuator on the front axle. over many years they either go bad or get sticky or dirt in the moving valve part. they are located on the passenger side in the engine compartment on the top of the fender well. there should be one with a blue dot and the other with a yellow dot. if you are good at taking things apart, you can unbolt them and disconnect them and spray some cleaner through them hook the plugs back up and work them back and forth and try to clean them out, sometimes they seem to get sticky over the years. if that doesn't help, you may need to replace them. the actuator works on a vacuum system. I am pretty sure that if my memory serves me well, the yellow dot is for keeping it in 2wd and the blue dot assists at putting it in 4wd. your yellow dot solenoid is probably the culprit. keep in mind, that actuator on the front axle is already spring loaded, so at rest without vacuum, it always wants to be in 4wd mode (free wheeling clutch activated). the only thing that keeps the front axle disengauged (2wd) is the vacuum through that yellow dot actuator. when you put the truck in 4wd, it basically takes vacuum away from the yellow dotted line and applies vacuum to the blue dotted line to 'assist' in locking in the front axle free wheeling clutch. now even without the blue dotted line working, the spring load of the actuator would eventually put in 4wd, but the blue dotted line helps this process as it needs more force to go into 4wd than to come out of 4wd. i hope this helps and if I confused you let me know."