I’m probably going to ignite a firestorm of responses on this one but here is my experience. I’m actually running synthetic ATF in my rear case right now. This comes from experience I had riding an 82 VF750 Sabre. I bought this bike in 1983 and rode if for 31 years, trading it in for my current 97 ST. The rear case would push the hypoid gear oil out the top and make a mess of the rear end. This was a known issue on these bikes. I tried replacing the vent with a 2” brass riser tube, slotted at the top and a 45auto case soldered on the top upside down. I thought a bit of elevation would keep the heavy oil from pumping itself out. Apparently there is enough centrifugal force inside the final drive to push the oil up and out the vent.
Based on some articles and writings at that time, I decided to try ATF in the rear case to see if a lighter oil would stay put. It did, no more oil pumping out of the vent. Here is where I made some interesting observations. With the heavier hypoid oil in the rear case, it would get very warm after a long ride. If you put your hand on the case, it would be hot. Not so hot that you couldn’t keep your hand on it but it was very warm. After draining and replacing with ATF, the case did not get as warm. I have no empirical evidence or temperature readings to back this up but you could feel the difference. Now if friction generates heat and there is less heat buildup running AFT in the transfer case, what does that mean?
When I got the ST, I performed the same experiment. I took the bike out for an extended ride. When I returned I put my calibrated hand on the rear case. Yup, very warm. I drained the oil and noted the odd smell mentioned elsewhere in this discussion. It seemed a bit dirty but otherwise, okay. After putting synthetic ATF in the rear case I performed the exact same ride on similar weather conditions. When I put my hand on the rear case after that ride, it was not as warm. ATF has many high pressure, high temperature properties that seem to work well inside a gear case. Many manual transmissions in trucks spec out ATF, not hypoid gear oil. My Ford Ranger did.
I’m sure there will be many responses explaining how I have violated many mechanical, and physical laws of nature doing this but this has been my experience. I will probably put synthetic gear oil in as part of this winters’ maintenance to get back in the good graces of the motorcycle gods. Take the observations for what they are. Don’t hate me for running afoul of the maintenance schedules.