Sqeaky Speedo Cable... SOLVED!
Im going to reply to my own post after figuring this out today (nice and sunny outside)...
I was sort of right in theory #2 in that the plastic arm was the solution. The reason I couldn't get it off was that you need to push on the lever about 1.5" from the base. it then lever's and releases the cable.
To figure this out, I disconnected the speedo cable from the transfer case and then gave myself enough slack so I could see the connector behind the instrument cluster. This was not actually that difficult to do and was way easier than fishing around blind behind the cluster with my hands.
I solved my sqeaky speedo problem too... what I did was prop it up and put about a teaspoon of Mobil 1 10W-30 Synthetic oil in the end of the speedo cable which naturally has a little cup where it joins the cluster. Keeping the cable upright so the oil didn't spill out, I drove around town about 10 miles (still sqeaked at this point) and then let it sit an hour. After an hour, the oil was gone and so was the squeak, I put in another teaspoon and drove about 5 miles. The oil was gone again. I called it good and put it back together and have not heard a sqeak yet. My local auto parts store (Advance Auto) didn't stock the speedo cable which I why I tried this method. Much cheaper... we'll see how long it lasts.. I have heard good reports of it solving the problem for years.
Anyway, there is one for the archives.