BMW Repair: 4hp-22-eh transmission problem, bmw 535i, trans fluid

Question
hello.  i recently bought a 1993 bmw 535i with the zf 4hp22-
eh auto transmission.  over the past few weeks, it
has started to act up.  when the time comes to shift to
third, it tries to, but jerks, and stays in second.  if
you continue accelerating, when the time comes to shift to
fourth, THEN it will shift into 3rd, and then
overdrive.  sometimes it will be fine, but then you can shut
it off for a few minutes, and when you go to drive
it again, it will not work correctly, with the same problem
mentioned before.  i changed the trans fluid (it was
burnt i think) and filter (i looked at the screen, and there
was tiny bits of metal in it, and there was a good
teaspoon of black metal paste on the magnets in the sump),
that solved it for about 2 weeks, but then the
problem returned.  what do you think the problem may be?  it
is fairly old, with 295,000 km on the odometer, and
i don't know how the previous owner maintained it.  would it
be cheaper to rebuild the trans, or swap it?  i can
get a used trans for $300, plus the labor to swap it (should
only take them a few hours) vs just labor to
rebuild it.

also, is there supposed to be a heat shield between the
exhaust and transmission?  they are 2 inches apart, and
a while ago, i came home and there was what looked like a
heat shield laying on my driveway.  could the heat
shield falling off have caused the exhaust to overheat the
trans fluid, causing the problem?

Answer
Yes I believe the transmission is worn and a rebuilt or replacement unit is required.If you can get a good used one for $300 I would think about that route,to rebuild or get one that has been it is much more costly.As the heat shield goes it must have fallen out,and no it wouldn't cause the transmission to overheat.