Transmission - 700 R 4

I have no idea where talk about trannies are to be posted, so if this is in the wrong area, EXCUSE ME! (I didn't see an X rated area)

I have a 700r4 and just recently it started acting up on me, it no longer slows the vehicle when I let off the gas. Now it free wheels. In other words, if I am in second gear at 4000 rpm and let off the gas, the engine rpm will drop to 1100. Same in first and third. In O/D it is a little harder to tell. If I speed up to 2800 rpm in O/D and then let off the gas, it seems to slow the vehicle and the rpm only drops to 2000 rpm.

So I was thinking that the band was weakening but doesn't the band only effect second and O/D? Besides all this, during acceleration it is as strong as ever. Hard shifts and no slipping. This is with 500 plus hp plus another 250 shot just for added measure.

The TV cable is set properly and the oil is full.

First I would check for engine braking in manual low, 2nd, 3rd gears at low speed. There is a overrun clutch in the input clutch drum that has worn frictions.What does the fluid look and smell like? How many miles?

Thanks for responding tl34ru. I meant to say that when I place the tranny manually into 1st, 2nd, or 3rd, and let off of the gas, the rpm drops to 1000 or so. And the oil looks grayish red. So you must be correct. I have worn out fictions and metals in the input drum. I can not smell anything burnt-like. I have probably 5000 hard miles on it.

Does it hurt it any to drive it?

How old is the fluid? I would go ahead and service it just to see what is in
pan and if the pan is clean. The damage is already done, as long as the trans shifts good I wouldn't fix because that clutch will do it again under harsh conditions.I have a 700 behind 383 in a 4x4 that hasn't ant engine braking for several years.

Ok, I'll change the fluid on Monday and just drive it cause it works fine. The oil is 5 years old.