can I install a selectable transfer case on my dodge durango to eliminate the AWD feature?

Yes but you wont gain that much as the font alxes and driveshaft will still be rotated by the wheels. But if you swap the t-case now you can always do the front axle with disconnect later. Best bet would be to find a doner dakota and strip the t-case and all related components for you install. If you can find a wrecked one you may get the front axle too. Just verify the t-case lenghts and spline counts on the rear output and yoke size on the front. I'm sure they are the same between the durango and dakota for that body style but I cannot confirm 100%. You may have to jumble some yokes/u-joints.

You will not improve fuel economy by doing this since you will still be turning the front wheels. I had the 2000 durango 5,9 with the older t-case and the fuel economy was worse then on my 2002. best thing to do is to be light on the gas pedal, have the right air in your tires, I have 40 psi in mine, Have regular tune up and regular oil and filter change on the motor and if it´s time for fresh fluid in the trany have that done to. Tires can also make a big difference, if you are not using it for off roading have regular tires.