I've been disabling AFM using L9. I've noticed in city driving, the transmission feels sluggish and the shifts are not precise.
When I go back to 2wd it's like the Tahoe wakes up and performance is much better. For highway driving, I like the performance using L9.
Is it critical to use L9 in city traffic to prevent or delay engine failure?
Why does it seem like you're actually asking three questions instead of one, only two of which I can answer with certainty?
You effectively disable 10th gear, by driving slow enough to avoid 10th gear ... until going fast enough to enable it ... THEN you disable 10th with L9.
4L60E's 4th / final gear is mathematically equivalent to 10L80's 9th gear, so if forced to guess from my experience tuning 4L60Es (albeit in lighter vehicles),
if you're under 30MpH, I very strongly doubt it'll make it to 10th unless coasting downhill.
It might even be a lil bit higher, but unless someone else chimes in, I'd use L9 at or over 30MpH.
Since you're going to lose a wee lil bit of MpGs by avoiding Engine Half@$$ / Cylinder Confusion, as well as 10th (totally worth it to protect the engine!),
I'd stay in 2WD unless road and/or road conditions require help from the front wheels.