I'm pretty sure you can use 4lo with the CD unlocked.
Just remember that you have to have the tranny in neutral before you put it in 4l, otherwise you'll get that annoying "beep beep" sound and your 4wd lights will flash. Ask me how I know that.
The 4runner is the first vehicle I've owned with "pushbutton" 4wd, and although I wasn't thrilled about going to this system (my previous 4runner and Tacoma both had the J-shifters) I have to admit it's worked fine.
A couple of weeks ago we got our first snow of the season on a Friday and it just so happened the wife and I were leaving town that morning and heading up to the mountains with our little teardrop trailer. The road was wet and intermittenly icy once I got above 7,000' so as soon as I got onto the wet pavement, I switched to 4 hi-unlocked and just kept driving. It felt great to be able to drive on the highway in 4wd without having to worry about the driveline binding up!