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Ok, here is the scoop. The production trans uses brass friction pates against steel drive plates. When overheated (which is usually caused by slipping under load) the plates will warp as mmwalter & Gerry says. Once this happens the clearance needed in the clutch pack for a clean neutral goes away, the plates are always rubbing. When they warp enough they will lock the trans in gear (per crazyhorse), and kill the engine if put in reverse.
It could work fine for quite a while, would help if you change to type F or FA fluid(ford spec). We use a graphite composite friction plate with a higher COF (coefficient of friction) and more of them. They are much less prone to slippage than the stock plates. Only problem is that they are softer than the brass, and if they do slip they go away altogether, no limping home while locked in forward.
The Ford fluid is a good bet in any case, it does not have the friction reducing modifiers contained in the Dexron fluids.
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