Can I tow a 1996 Grand Caravan on a tow dolly and do the wheels lock as sugested by the tow dolly co.?

Your owners manual says to use a dolly, you put your two front wheels on the dolly, dolly is connected to bumper hitch of another vehicle. Should not be dinghy towed, towed with all four wheels on the ground. I'm not saying you can't tow it with a chain? However you try to tow it, is your responsibility. Safety is your responsibility.
If you don't have an owners manual and want to look at yours, go to
my.gm.com

As long as the front wheels are off the ground.

Put the rear wheels on the Dolley and lock the steering wheel straight ahead.

as long as the drive wheels are off the ground. So, if rear wheel drive, the rear wheels must be off the ground.
If front wheel drive, the front wheels must be on a dolly.
If all wheel drive, all 4 wheels mst be off the ground.

The only way to tow this vehicle is on a flat-bed.

The answer is yes and no, but more no than yes. How far do you need to tow the vehicle? It is not recommended that any vehicle with automatic transmission be towed more than a few miles. With an auto transmission, towing without the engine running will not allow fluid to circulate throughout transmission, causing major damage to the gears in the transmission. If possible, use a tow dolly instead of towing on all four wheels.

If it was ever towed with the wheels on the ground (not dollied) then the transfer case is probably "burned out" and you will need to replace it. These models of jeeps are full time 4WD and MUST be dollied or towed on a carrier or rollback type truck. Unless they have manual locking hubs.

Yes it can. So long as the front wheels are perfectly straight and secured in this position and I don't mean secured with the steering lock as that will most likely break when your car hits a pot hole. Also, by towing with all wheels, you're adding extra mileage onto your car because the speed sensor is built into the front wheels (this amount will be considered negligible).

yes you can. put back tires on dolly. un lock front hubs or if elecrtonic then just make sure it is in 2 wheel drive