(on edit: made correction to 13- vs. 10-vane rotor section)
From the limited info we have, I would tend to agree with your mechanic. How many miles are on the truck, and do you plan on holding onto it for the long term, or not?
BTW, you may be able to 'work around' the problem for a bit by manually shifting - e.g.; put the selector in '2', and when you get to the shift point where it would normally go into 3rd, move the selector to '3'. This won't work forever, if it does work, but can buy some time.
You need what's called a 'master rebuild kit'. This will contain all gaskets, seals, as well as the clutches & steels. Since you have someone who can rebuild it, they should have an idea of which brand they want to get (you pay for it, they pick it out). At a minimum, you'll need this.
If you're rebuilding and planning on dumping the vehicle in the spring, then you may be able to stop here (or, you can get a junkyard trans and swap it in).
But if you want to 'do it right' and keep the vehicle, then you'll want to address these issues as well (in order of importance)
- Ensure the pump is functioning well, and replace if marginal. Pay attention to whether you have a 13-vane or a 10-vane rotor; you'll likely have a 13, as those were added from '97-forward. Replace with same. If you want to go all-out, and guard against fracture of the rotor, which can / does occur, billeted rotor kits are available (but they run about $200 extra)
- Put a new 2-4 band in. Raybestos and Alto make good ones, especially the 'High Energy' or 'Red' series.
- Same for the clutch packs (yes, I know you get them in the master rebuild kit; those will be 'standard duty'. Putting in HD clutches / steels addresses one of the weak points of the 4L60. Also - resist putting in 'extra' clutches - because to fit those in, all the other ones are made thinner, reducing strength and resistance to overheating.
- Address the sun shell; this is another one of the weak points. You have 2 to choose from - a 'Beast', or a Sonnax 'SmartShell'. You won't go wrong with either. I have a Beast in mine.
- The last weak point is the TCC / PWM modulation valve in the valve body. You can address this in one of two ways - via something like a TransGo corrective shift kit (orange box), or Sonnax's solution, which is to ream out the bore and put in an oversized valve. If you don't have any wear on the bore, the TransGo would suffice - the Sonnax reamer is expensive, and you have to be very careful while using it. Alternately, you can purchase a reman VB with the oversized Sonnax valve already installed. The Sonnax is considered the 'better' solution, but you've got a LOT of GMT360 owners here who swear by the TransGo fix - and I have that in my truck as well.
- Finally, I would replace the torque converter as well, to ensure that you don't ruin your rebuild with clutch fragments, etc., that might be in the existing one.
If you do / plan on towing heavy, look for something with a little higher stall speed (I think stock on our trucks is 2800 or so; I have a 3200 in mine).
Oh, and when you install the rebuilt trans, put in an auxiliary cooler. The cooler the trans runs, the longer it will last. With a good rebuild, a cooler, and good synthetic fluid, the new trans should outlast the rest of the vehicle.
Again, chat with your builder on these things - if he's actually rebuilt 4L60s, he's one up on me (I'm just a shadetree who had to pay to have his rebuilt).
