Odd Overdrive issue.
What isn't normal is the timing when it engages the system.
I have written some tech postings on the Borg Warner OD transmission with the 3 speed overdrive, even some pretty recently. I had one in my '66 for 30 years.
The OD is actuated by a pawl which is driven by a solenoid. However, for the pawl to engage the overdrive planetary gears, tension must be removed from the driveline momentarily.
When upshifting into the higher overdrive gearset, this is accomplished by taking your foot off the accelerator, which allows the tension on the gears to relax and the pawl to slip everything into place.
When downshifting, though, the tension is removed from the drivetrain (again, momentarily) from the driveline by killing the engine. The kickdown switch grounds out the coil, kills the engine which removes the tension from the driveline, which allows the pawl to drop back out into non-overdrive operation. As soon as you take your foot off the accelerator, the engine restarts and the transmission resumes normal operations.
Remember, the overdrive does not begin to work until the governor grounds out the relay on the firewall. The should occur at about 25-30 MPH.
Your current kickdown switch isn't set right, as it kills the engine far too early, based on your description. It should kill the engine just after it begins to bog down, either going up a steep hill or carrying a heavy load. Try screwing the flat headed hex nut in, towards the firewall.
The initial adjustments are in the Ford Manuals, and you have to play with it a bit to get it just right for your own driving style.
Hope this helps.



