Transmission gets worse as it warms up

When my '77- F250 is cold, the automatic transmission works fine, as expected.
Delayed Shifting: As the truck drives and warms up (approx 15 minutes in Summer weather), the shifting is delayed as well delayed in engaging: the engine revs up but the transmission doesn't engage right away. There is a pause before coming from stop into drive - when I am starting up at a red light. And it is a 'hard engage' when it finally does catch.
This is also very obvious when I am switching from Drive into Reverse. When I make the switch, the engine revs, the truck rolls (when on an incline) and it will jump into reverse after a few seconds of revving. It is not a smooth or instant switch.
NOTE: The transmission doesn't slip- it just is delayed in shifting gears as well as engaging.
Any idea what this issue is?? All suggestions are welcome. Thanks!
But to answer your questions specifically:
Levels: The levels seem fine. See attached pics.
Color: The color is OK, it is dark- but not black/filthy. There isn't any evidence of metal shavings either- although I assume that'd only show up in the filter, not the dipstick.
Smell: Burnt smell, it does have a pretty strong burned metal smell.
I wiped the fluid onto a clean paper towel so you could get a better idea of the color. Its dark- but not black,
Here is a snapshot of the fluid while the engine was hot. The truck was level and was driven for 15 mins.
#1 Fluid and filter change. Try and strain the fluid to see how much metal is in it. Look in the bottom of the trans pan for metal flakes, look for a magnet in the bottom of the pan that has trans sludge on it. You also need to see about draining the torque convertor.
#2 Insp the trans modulator and all associated steel and rubber lines. Possibly replace modulator.
Does the truck have a separate trans cooler or just routed to the radiator?
They are different solutions though. Ideally, I'd like @77&79F250 suggestion to solve it as it is a cheaper and faster fix as it is a service- not a full rebuild.
That said, the risk is that if it doesn't solve the problem, it'd be money and time spent that could have been used on a rebuild that Mark suggests.
I am just trying to find the best way to approach the next step and could use a bit more help figuring this out- with your input. I am going to start by going over the servicing steps- but at what point can I determine whether it' would need a rebuild to replace the dried-out seals??
Yes fluid and filter change cost (X), plus the labor time, yours or a pro shop. But not that much in the big picture, when you compare it to going right to a trans rebuild. And IMO the fluid and filter change is the next step in troubleshooting. I bet the actual shop manual also says while the pan is off something about adjusting the transmission bands. But I am NOT a transmission guru like Mark.
If Mark the Former Ford Automatic Transmission Engineer 1988 - 2007 says it is time for a rebuild, safe to say he is 99% right. I have to give the 1% to my suggestion in hope that fixes it. Let us know what you get figured out.
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Drop the pan. It takes 15 minutes, and that's with a beer break. Inspect the lines. Another 10 minutes. At least that will provide the people you're asking for help with a little more information. I'm with Mark though, and I would listen to what he says. I don't know the man personally, but I've read a ton of his posts and respect him as a fellow automotive engineer. I'm not in hardware or design release, but I interact with those guys and their processes all the time in the course of my job. The fact of the matter is that just about any internal failure is going to result in a rebuild unless you really know what you're doing and can disassemble, diagnose, repair, and replace the transmission on your own. Shops are not going to tear down a trans to the bare case and replace just one thing. It's not worth their time and, if they did, they won't warranty the work since they are definitely going to find other issues that will cause future failure if not addressed. One failure begets another. Once one component in the transmission goes bad, it's a very rare case when something else doesn't follow suit.
Changing fluid in a trans that is failing, especially if it's burned up clutch packs, is just going to make it worse. All of that friction material in the fluid is actually helping the clutch to apply. Get rid of that bandaid and you're living in slip city. Drop the pan first. You'll only lose a couple of quarts of fluid. See if there's material in the pan or on the filter that shouldn't be there. Look at the fluid that's in the bottom of the pan. Is there debris? Does it smell burnt? You already said it smells a bit burnt. That's an indication that your clutch packs are either smoked or starting the process. Is it really cloudy with a black/grey looking mist in it? That's going to tell you, and us, a lot.
A full rebuild on a C6 is not that much money. I had a performance rebuild done on mine with high capacity friction and steels, upgraded band, Transgo shift kit, etc for $1300. It will be a lot less for just a standard R&R if you pull the trans yourself which is what I did. It's not the end of the world if that's what you have to do.
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