Originally Posted by sbchevfreak
Two things come to mind first off. #1 is did you check the converter hub at the drive lugs? The converters on 700R4's like to crack from the corners there, and then the crack will spread under load, forcing fluid past the seal. #2 is that the seal is pushing out due to insufficent drainback behind it. I found out the hard way that the drainage is good for about .005" bushing clearance, and once you get too much more than that, and you replace the seal, the new seals aren't stuck in as well as the OEM ones, and the added fluid seepage past the worn bushing will build enough pressure to push the seal out. The drainback holes in the pump & stator support need to be enlarged.
#2 would leak all the time, so I don't think this will be your issue. I'm leaning towards cracked converter hub.
I am afraid you just may be correct with the converter hub (how it got that way I wouldn't know). Due to the fact that the fluid saturates every part of the underbody from the bell housing to the back bumper I figure it has to be coming out with some pressure. I suppose I will have to drop the trans to look.