The plug is hollow, but I think it's aluminum...
Use a centre punch or a prick punch to mark the centre of the plug. Give it one AND ONLY ONE good swat with a hammer - this also helps to dislodge the threads.
Drill out the plug on the punch mark - penetrate slowly, so you don't push chips into the transfer case.
Use an EZ-Out to turn the plug internally. Of course, you'll have to source a new plug - either OEMR (dealer or junkyard,) maybe from the Help! section at your local, or just overdrill and tap for a pipe plug (probably 3/4"NPT or 1"NPT, I'm not sure.)
5-90