I'm not familar with the OD on MGs, but I looked at a wiring diagram, the OD activation switch and interlock switch are simply wired in series. Shouldn't be a problem if one of them fail. When it comes to an electrical switch that can fail and cause extensive damage to a very expensive part, it seems to me that this is something that definetly can be improved upon.
From what I've been reading, when this switch fails, it allows the OD to be activated at all times, in any gear. This means that it is failing in a CLOSED position. What should have been done was to have a switch designed so that when it fails, then the OD CAN NOT be activated. It should fail in the open position. First off, you won't destroy the trans, and secondly, you will know right away that something is wrong...not have to ask "How do I know if the stinking switch is fakackta??"
Whether a switch fails mechanically or electrically, it should fail so the circuit is NOT ACTIVATED. Unless I'm missing something here, this is a poorly designed switch.