I found the following excerpt from Autoworld.com. It is for a '99 Exby, but I think it applies to the '03 as well:
"A4WD, in which Control Trac automatically selects between two-wheel drive and four-wheel drive as needed. The transfer case monitors drive-shaft speed and reports the onset of rear slippage. Should rear slippage occur, a computer-controlled electromagnetic clutch engages to add torque to the front wheel. If the rear wheels regain grip, the clutch automatically disengages. When slippery conditions persist at speeds below 35 mph, Control Trac keeps front drive engaged for five minutes or until vehicle speed exceeds 45 mph. This mode can be engaged at any time with the vehicle in motion."
In any case, I am of the opionion that if you don't need to use it, don't. It simply represents wear and tear, and in this case, on a clutched system. If you think you might need it, use it, but otherwise, leave it off. During the warm spring/summer/fall seasons, use it once in a while, as well as the full 4WD to keep things lubricated.
Hope this helps.