In my opinion, the X5 isn't designed for "off road". For that, nothing beats low range, full time 4WD, and locking diffs. You also need better ground clearance and skid plates for true rock scrambling.

What the X5 can excel in (adding good winter tires) is snow and ice conditions. In my limited experience, it seemed un-stoppable last winter and had no issues where others even with AWD SUVs reported some slippage.

Where the torque vectoring rear diff can make a difference is giving an AWD vehicle a RWD feel. I don't think its purpose is traction enhancement. When you punch the throttle, it can push torque to the outside wheel and make it feel like oversteer. Although with TC and DSC it won't actually BE oversteer. But the X5 even without it can put a lot of power to the rear wheels and push the back end around a turn.

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Richard
Sir Snaps-a-lot, 9 Time Dragon Slayer (54 runs!)
2011 X5 50i Alpine White, Biege Nappa /Lt Poplar M Sport
2009 Z4 35i, Black Sapphire/Ivory-Black/Anthracite

Gone but not forgotten: '08 550i, '06 X3, '06 650i, '02 M5, '99 540i