It will probably not hurt your truck but I think this will depend on how bad the transfer case is. You may not be using the 4 wheel drive but I guess there are serious risks to consider since you never know if it might cause more damage to the shaft. The transfer case has power going through it regardless or not if you use the 4 wheel drive and it is better to have it fixed than assuming.
I'm no mechanic, but I had a 98 z-71 and when the transfer case started going out on it, it would jump out of 2wd into neutral. GM told me that on that truck that there were still gears turning in it even when in 2wd and when the transfer case goes completely out I would loose 2wd also.. I sold it and got a new truck so I'm not sure exactly how it works but I would have to say it is possible on some trucks. It got so bad I could barely drive it .