My rear axle is leaking from both sides onto my brakes, one side being worse than the other.
The fluid seems pretty thick and black, which leads me to believe its grease from inside the sealed hubs as opposed to thinner gear oil. However I understand that the somewhat thick gear oil mixes with brake dust and can look like hub grease.
When I pull the hubs to inspect, how will I know if the fix is a simple o-ring replacement or a complete hub replacement?

 

The hubs are filled with oil not grease and they never leak.
When gear lube mixes with brake dust and dirt it will look and feel like grease.

Since it is leaking out both sides clean your axle breather, if it is clogged it will force gear lube out of the axle.

It is on top of the axle, both axles have them.

Remove them, blow them out with compressed air and make sure they are clear.
Put them back.
If the leak continues then you will need to replace the hub seals.

 

I agree with Spike, clean out your breather tube and get rid of some of that back pressure, service it at the same time.
As for the leak, the hub is filled with a very heavy blue/green grease not an oil. When leaking gear oil it is usually from the large o-ring located between the hub and axle. These can be replace for about $2 a pieces and some labor.

 

I don't think it's the breather tube. I first suspected that and checked it- and ended up breaking that cheapy plastic fitting when I couldnt get the tube to pull out of the grommet. Once I had an open end on the tube I tried blowing into it and could not hear or feel air coming out of the other end, so either it was clogged or I wasn't checking it correctly since I dont know where the other end of the tube is. I then took a straightened out paper clip and checked to see if the passageway into the axle was clear and it seemed fine.
Now that I've had this open hole in my axle for a few months, it has not changed the leaking.
Question- will a competent mechanic know if it's the o-ring or the hub itself? I cannot tell by the color of the grease/oil, since everything appears black and greasy. And is 2 1/2 hrs a legitimate labor estimate to replace the o-rings/ and or hubs?

 

What leaks from the hub, what leaks from the axle?
Why are you going to turn a mechanic loose on this when if you were a little mechanical, you could do it your self.
You will also need to replace the breather tube and brake pads.

 

I'm a complete novice with a pretty lame set of tools and no manual (probably time to step things up, like buying a good craftsman set and a RAVE CD.) Probably best for now to entrust a mechanic? And, as such, I don't know how to tell if the leak comes from the hub or axle. Logic however tells me when the hub is pulled I will then clearly see if the leak is originating from the hub or axle.
Regarding the brake pads- have I forever ruined their stopping power by contaminating them? Or might the fluid "burn off" after some miles?

 

actually to tell if its the hub itself then take off the rotor and you will see the leak. most likely its the hub but it might be the seal.

if you buy the hub make sure to order a seal with it.

 

Yes your pads are ruined. With these trucks either DIY or expect to pay way more than the truck is worth in repair bills. I will go a step farther and say if you are not willing to learn how to fix things yourself just sell the truck unless of course you are wealthy and don't mind money pits. Have you ever smelled gear oil? It should be obvious if that black goo is from gear oil or not, probably is. That being said DII hubs will fail quite easily and frequently also. Regardless changing the o'ring is easy with a simple set of tools and the shop manual, which is a free download btw.

 

Rear axles do not have seals they have o'rings