Bart,
I recently fubared the speed sensor on the drivers side too (or more acurately, my mechanic did) and from what I can tell these are only necessary for the ABS. I drove to Moab without the speed sensor and my speedo worked fine, but my ABS light was on. As soon as I replaced the sensor at The Stoop, the ABS light went off and the speedo still worked.
From what I gather the sensor is basically a magnet that senses the ridges of the "tone" ring as they pass by. The ABS brain then compairs the information from all four corners to make sure that the ridges are all passing by the sensors at the same rate. As soon as one wheel speeds up, or slows down, then the signal from that wheel is different and the ABS kicks in during brakeing.
What I DON'T know is if these sensors have something to do with the TOD system. How does the TOD know when one wheel is spinning faster than the others if not for the speed sensors? Anyone? Is the TOD sensing taken care of in the transfer case somehow?
"The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong, it usually turns out to be impossible to get at or repair."
-Douglas Adams, Mostly Harmless