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Well, Dexron III was never recommended for the torqueflite. I would flush the fluid and fill with ATF+4 and then start looking for a 904 or another 727, unless you are willing to tear yours all the way down and go through it with a fine toothed comb and see what has been done.
It may not have been Dex III. I can't remember what it was off the top of my head but I do remember it saying Dex/Merc on the dipstick. I can assure you it's what it said on the dipstick. Besides Uncle Dan says Dexron is Dexron.
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Have you confirmed that you have a part throttle kickdown module? Some 80s era 727s were built without part-throttle kickdown (even some 80s era 904s).
Yes, I have part throttle kickdown
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Frankly, unless you haul heavy loads often, a 727 is overkill in a slant six vehicle. I strongly recommend you get a 904T with the wide gear ratio. You will need a longer driveshaft, but you can grab that from the donor truck. The 904T is a lockup, and the lower 1st and second gears will help your big heavy pickup get moving a bit quicker.
Yeah I know it's overkill but it's not going anywhere until it ceases to function. I looked at the shift kit you suggested and all the problems it cures are the problems my trans has (mushy 1-2 shift, late 2-3 shift, premature lockup). Looks like I'm getting a shift kit.
Should I get the Superior TF-TC or the Transgo TF-SC? The main thing I'm after is the converter lockup speed.