Chrysler Repair: ATC Head Control Unit problem on 1998 Dodge Intrepid ES, dodge intrepid, dodge dealer

Question
I have been having an issue with the ATC system on my 1998 Dodge Intrepid ES. The symptoms are that when the car starts the heat runs fine for about 15 minutes. After that the system will start blowing cold air. If you raise the temperature by a couple of degrees the system will blow heat and after a few more minutes it starts blowing cold air again. This will continue until you eventually reach 90 degrees (the max displayed temperature). If you move the temp up to HI then it blows an overwhelming amount of heat. If you try and go back down to 90 the system blows cold air again. This problem also occurs in the summer. It seems to me that a temperature sensor must be failing high telling the system it needs to blow cold air to regulate the temperature. The AC also automatically runs even with the temperature down in the mid 30's which also tells me there is a sensor problem.
  I took the car into a dodge dealer who at first told me the problem sounded like a sensor or the head control unit was failing. They called me later in the day to tell me that they ran diagnostics and the ATC was working fine but the problem was the heater core was blocked and needed to be replaced ($900) and also the A/C clutch was "melting" and needed replacement ($650).
  This diagnosis really makes no sense to me since there is plenty of heat when the car first starts off and if the system is set on high. Isn't the heater core flow either on or off with a diverter valve of some sort controlling the amount of heat sent to the passenger compartment? I get the feeling I am being taken to the cleaners because when I asked the dealer he told me he couldn't guarantee that my problem would be fixed if I paid him $1500 to do the repairs. I still strongly suspect a sensor failure which I was told is composite with the head control unit. Can you provide any assistance in diagnosing this problem.

Answer
Hi Keith,
I agree with your analysis. Fortunately there is a self-diagnostic capability of the ATC.
With the engine running but the vehicle at rest, set the temp to 75. Then simultaneously press the Floor, Mix, and Defrost buttons. The display will start to blink. Then it will present diagnostic trouble codes, the one for the interior sensor is 26. If no codes are stored it will return to the normal temp display.
If there is more than one code, you will find out by pressing the panel mode button. Don't touch anyother button till you read all the codes. So try that and let me know what the code(s) are and we can go from there.
The temp out is determined by the position of the blend door which determines how the air is shared between the heater core and the a/c evaporator core. So that control process might also be the problem (code 45 or 46). The water flow and refrigerant flow are not controlled per se.
So thank the dealer for his offer and drive away.
Roland