Chrysler Repair: chrysler t/c 94, 3.8L FWD, A/T overdrive, dexron iii, shaft support

Question
mine (A604, T&C 1994, FWD with overdrive)moves nicely from the start. Changes to second and tries to grab on to third, shudders, and goes to limp mode. Shut off ignition and restart to reset and does the same thing over again. Took out pan and changed oil. Found graphite sediments in pan, cleaned out and refilled with fresh oil, new solenoid, same problem.
Code check at the dealership says faulty gear ratio in 2nd and 3rd. What in your experience is bad and needs to be replaced during rebuild. Can I have a list of those parts that need replacing. This is my first time rebuilding. I have the rebuild manual that indicates the use of dexron III, which I already know is wrong. I heard chrysler has upgraded the internal components to last longer...
any advice?

Answer
Hi Benjamin,
I have not rebuilt an automatic transmission, but the shop manual for '94 shows these possible faulty parts for those two codes: reaction shaft support seal rings, input shaft seal rings, pump, U/D O/D 2/4 clutches, accumulator seal rings, clutch seals, sticky valves, regulator valve, internal solenoid leak, valve body leakage. I would inspect all these possible causes; clearly to buy them all would be prohibitive. Correct, no Dexron.
The manual does seem corroborative of some internal transmission faults so opening it up seem to be necessary. Best of luck on the project. I would be interested to know how this works out for you.
Roland
PS Use the 'thank/rate' tab to get back to me with any other questions, without having to wait for me to 'available' to take a question. There is a space for comments.

roland, thanks for getting back to me. those parts are a lot to replace, wow. what do you mean "prohibitive"? I have a trans shop willing to rebuild it for 750 (rebuild only) and 1400 to include the pulling out and reinstall labor, with one year warranty. Issue is , am hard on cash now so thinking of saving on the labor. I even installed the t/c lock up control circuit by Craig on allpar.com. Thought that might solve the problem. How will that affect a the performance of a rebuilt trans? What do you say here?

Hi Benjamin,
Thanks for that reference at allpar.com to craig's fix. Maybe the best thing to do would be to ask him (there is a place to click in order to do that). This is a level of sophistication that I haven't reached, though I see what he is getting at. Fortunately my '89 is the old-style non-electronic 3-speed automatic, so I haven't had to deal with this issue.
Roland