seen this problem before
I used to work at a gm dealer. I have seen this problem before. I was told a lot of transmissions were replaced for this problem, but the actual problem was in the ignition switch. The wire that powers the transmission is the same wire that powers a few other things, such as some of the guages and ABS i believe. The wire that powers the igniton is seperate from this. Thats why the vehicle will still start and run fine, but guages may not work and ABS light is on. I can't remember exactly what the colors of the wires are, but it was a common problem. The igniton switch is making connection sometimes, but not all the time, thats why if you turn the key on and off a a bunch of times, it will sometimes work again. You can verify this by testing for power either at the transmission or the ignition switch. It is true that is the trans. is not powered up, it will defalt to 3rd gear only. Hope this helps someone.