When you run a bigger stall convertor then stock you always want to run an external transmission cooler to where it gets good flow to help with running bigger stall convertors and stuff and that is how to keep your transmission from burning up. Depending on the application some folks will run an electric fan to cool the external transmission cooler but I have had builds way more wild then what your planing to do and all I had was an external tranny cooler in front of my radiator with a 3500 plus stall convertor once on a 86 chevy s10 and a th350 with nothing more then a shift kit installed and I had around 425 or so horsepower and I ran it like that for over ten plus years and drove it in and out of traffic and my transmission never failed me or gave me any trouble.
If you get a stall convertor around just over 2000 rpm it would not burn up your transmission if you use an external transmission cooler. Below is an example of what I run to keep my transmission cool and it works fine without any electric fan type setup. I just have it in front of my radiator between it and my front grille and the fan pulls air through it and I have a temperature gauge on my transmission and it has never gotten hot even with a previous small 10 inch 3000 stall. The size of the convertor plays a part as well in how much heat things will make. The bigger the stall and the smaller the size then the more heat it will make as it is more loose and slips more and holds less fluid.
My stall convertor that I previously had was a small ten inch size but mine that I have now is a stock size for a th350 and its a 12 inch size so it hold more fluid and will not slip as much and be loose like a smaller diameter higher rated stall. Get you a good quality 2000 plus stall without going to much more then that and put on the biggest external tranny cooler and it will work fine. There is more then what I posted but that is the basics of some things. Below is just an example but not the exact one I am using. The stack plate ones are more better then the tube and fin style from what I heard and more durable as well.
I can't tell you anything about the whole lockup stuff on transmissions as I am no expert on that but I do know they make kits to lockup the stall convertor on the 700r4 aka 4l60 and yours would be similar and I would research that part and I highly doubt that mod would burn it up if done with the right parts and way. There are legit kits out there but you have to be careful on what one you use. I have seen some performance 700r4's with the lockup feature taken out and make the transmission like a non lockup style. I am sure there is some more information there and I don't know what that is but I have seen them sold like that.
If it was such a thing that it would burn up the transmission then why would they sell one like that. TCI and some other names were the ones I have seen that on before. I just prefer a th350 myself. What you got can be made to work. The statement above is most modern mechanics of the average run of the mill know nothing about performance stuff especially the stuff we run of the old school variety.
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