Sounds like they want to redo the entire rear! I guess "right" can be defined that way, but I wouldn't do anything but put clutches in it unless there was another probelm, like the gears were messed up due to sled pulling.
If none of the seals leak now, why mess with them? They aren't that hard to do if one does start leaking.
My 96 has 236K on it, including a lot of heavy towing, and the rear has no problems with leaks or anything else.
Sure, you could rebuild the entire thing, but does it really need it? Is there a lot of slop in the gears? Whining? Other abnormal noise besides the clutch chatter?
My plan of action would be as follows:
1. Order the Powrlok rebuild kit from Randy's, which should have clutches and steels in it.
2. Get some friction modifier and put it in a Tupperware bowl with the clutches overnight.
3. Take it to them and have them install the clutches, if you don't feel like it. Find out how much to do just that! Note that no "setup" of the rear needs to happen if they are just putting the clutches in, as the same carrier is being used and they will reuse the same shims, in the same places, if there are any in there to begin with. Should not be more than about 1. 5 hours of labor, if the mechanic is slow.
4. If they pull it down and find bigger problems (not likely if you answered No to the above questions), you wan to see exactly what's wrong in a shop visit, and if it makes sense to you, order the parts from Randy's (they have it all), and take them to the shop.
Personally, you could probably do the clutches yourself easier. Only if the gears need to be set up would I take it anywhere else. I have never taken the time to learn to set up gears properly.
Chris