If they have banned the center diff, they will probably use a clutch-pack to allow some slip between the front and rear axles.
This is not an uncommon solution in todays (small) SUV´s which are mainly driven in 2WD mode.
On loose/low CoF surfaces, such as gravel or snow&ice, it´s not such a big problem, as the difference in slip can be accounted for by the wheels.
On tarmac it would put some stress onto the drive train.
IMHO it would make the cars a little understeering.
The handbrake activated "cut off" of the rear axle, is not so new either.
Many cars had it back in the mid 90´s in the WRC.
In it´s simplest form it´s just a clutch which disconnects the torque/drive to the rear axle.
A clutch pack in between the output shaft of the center diff and the propshaft would do the job.
something along the lines of this/ but with a simple hydaulic input via a tandem or twin master cylinder in the hydraulic handbrake.
If you use a clutch pack anyway (like in the Nissan illustration above), you just use a "brake light switch" on your handbrake to open the clutch and then you have only front wheel drive.