Yes, the TC is lockup style. It locks up in 4th for sure and it is supposed to lock up in 3rd when OD is disabled. I have seen members here post that it does lock up in 3rd (people were concerned about towing in third over long distances) and I believe where that came from was the FSM and people watching the tach gauge in their own Jeeps. I can check an FSM to make sure.Interesting plan, I am not a huge automatic fan but have a few thoughts/questions to consider.
Does the 42RLE have a locking torque converter ? And if so does it lockup in 3rd gear if OD is shut off?
If the TC isn't locked will the trans run extremely hot at crusing speeds in direct 3rd. gear ?
Maybe an automatic fanboy can weigh in on these concerns.
I like the concept of compensating a work around for dealing with the Bonneville approved OD ratio in a Jeep.
If the TC didn't lock, then yes it would be a problem. In the old days (early 90s and prior) most vehicles shipped with non lockup converters but the non locking converters were built a bit differently to handle that extra heat and constant slippage, so they were performing to their design criteria and it was fine (other than the extra mpg loss and noise due to the engine running at a higher non-locked RPM. I believe it is more critical that a lockup converter needs to actually be able to lock up or else it will generate a lot of heat and won't last as long since it wasn't designed to constantly slip.
I have seen it confirmed by members that their 42 locks up in third when they turn off OD so it should not be an issue at all.
