diagnose problem with tranny?

i have a 2001 montana with 117000 miles on it. the tranny has never been touched. my problem began about a year ago when i would go up a slight grade it would cut in and out and then would run ok. i thought it was a fuel problem. my mechanic suggested it might be the torque converter and to try drive 3 when this occured which seeemed to help at first but now its doing it in drive 3 also. lately when i was cruising on the interstate i noticed a high pitched whirring sound which also disappeared when i dropped to drive 3.

a transmision guy drove it and told me that 4th gear was gone. a rebuild would run between 1000-1500 bucks. is this the way to go or is there some additional diagnostics or other possibilities? he said that gm did not heat treat this gear which is why it wears out and he could tell by watching the tac plus the sound.:confused: