Its always funny to read something you wrote 5 years ago.....Turned out there is a common problem in these if you have the 55re (long time ago i think thats the trans) transmission. A faulty blow off valve in the valve body causes the Valve body Gasket to blow. When you pull your pan off you can look around the edges where the valve body meets the transmission and you can actually see blown gasket. Pieces of the gasket will will get circulated all through your valve body and cause problems. I ended up getting quotes from 2500-3k for a tranny work. I ended up getting a remanned valve body for $250 and changing it myslef and it fixed the problem. 50k miles later and its still going strong. If anyone has a shift flare like this between 2-3 gears pm me and i can give you some tips, i dont think i can post any links here. I also did the same thing with my 99 dodge durango, was having some slipping in the mornings when cold between 1-2 and 2-3 gears. remanned valve body fixed it. I wonder how many tranny shops just swap out or reman valve bodys to just fix issues......