It was a lot easier for me to install the shifter because I cut an access panel in the trans tunnel. Still a pain, but a little easier with another approach angle.
I had the same concerns about the shaft engagement, but I have not had a problem. Of course, I've still got the stock 258 with maybe 100 hp these days. Also, the extension seal was made by Teraflex - who offered it as an adaptor for their 231Low transfer cases. These were 4:1 ratio modified NP231 transfer cases used in rock crawler Jeeps, but they only made one version with a short input shaft. The extension seal was used with Jeep automatics, and it would be the same situation as ours - so you'd think that less engagement of the shaft would be OK.
Great stuff!