Subaru Repair: Legacy front differential repair?, thump thump, oppinion

Question
My 96 Legacy has been making thump-thump sounds when turning and backing up, and it feels like there's some sort of obstruction around the front wheels, particularly on the passenger side. The garage told me the front differential has locked up and that when they put it on the lift and try to spin the front wheels, they won't spin independently.  They say the transmission needs to be overhauled and it will cost $2200 to fix and will take 2 weeks.

My car has almost 138,000 miles on it.  It also needs a new catalytic converter.  Do you think this estimate of cost and time is accurate (that doesn't include the CC)?  And is this the type of thing that I could run the risk of getting it overhauled but the car will never perform quite as well again?  In other words, do you think it is worth the $2200?  I know Subarus run forever, so I hate to have to buy a new car if I can avoid it.  But I also don't want to keep a car that will plague me with repairs.  Thanks for your help.

Answer
Before I would spend $2200.00 I would take it to your local dealer and get it diagnosed by someone who knows Subaru's. The front wheels are not suppose to spin indendently. DO not tell them that another shop looked at it. Let them come up with a diagnoses of their own. Then you can let me know what they say. It's hard for me to believe it the Front diff. And that also sounds like a lot of money. I don't have part prices in front of to go by, but it seems high to me. It will be worth the cost for a second oppinion.