Thanks to Wizzer and Dfluitt for the posts and the photos. I'm one more happy guy who found this thread and fixed the heat problem in our 2002 Highlander.
The plastic frame that the heat control knob is screwed down to was broken, so I grabbed some epoxy, and glued everything together to strengthen the frame.
Looks like a pretty bad design to me. Kind of disappointed that Toyota doesn't acknowledge the problem and issue a fix.
