I was just reading about Broken Arrow trail outside of sedona Az, and it seems from the description like you drive on slabs of redrock through out the trail. So my question is if driving on pavement while 4WD is engaged can cause damage to the 4WD system (due to traction differences front to back if I understand correctly), then do you have to disengage the 4WD while off-roading on these large rock slabs? It seems to me that pavement and rock slabs would have similar traction characteristics.

yes but you have to think that sometimes wheels will come off the ground/lose traction and you must rely on the ones with traction. 4wd is necessary in those situations. There are many times in Moab where trucks are driven 40 some miles per hour on the red rock in 4hi with no ill effects.

Driving in 4 wheel drive in a straight line on dry pavement/rock will not hurt the truck. The damage is done when making turns on dry pavement/rock. When the vehicle makes a turn, the front axle rotates at a different speed than the rear axle. This causes the "jumping" or "bucking" sensation (if you've ever made a tight turn in 4 wheel drive on dry pavement you know what I'm talking about) and can lead to drivetrain damage.