TBS, where's your sender (I think you once told me but I forgot. I'm thinkin it was either a manifold connection on the trans output line, or in the pan)?
As long as the temps came back down (once you shifted, dropped the revs, or slowed and the fan started cooling things), you should be ok. If it lasted for more than a few mins, I might think about doing something else (a second cooler, bigger cooler, etc). As you know, 170*F is the target temp.
I am using one of those temp manifolds Autometer sells. Basically a block of aluminum with a port on each side to allow fluid to pass and a 3rd port on the top where the temp sensor attaches.
The temp manifold is bolted to the lower radiator support.
When it got to the 190* area, thats pretty much where it hovered. It would drop a few degrees when I got moving but not much.
I am running a mid size tube & fin style cooler and an auxillary trans filter kit.
I think I may need a larger cooler with the addition of the smaller diameter/higher stall converter.
Gotcha on the set-up; My gauge/sending unit situation is very similar.
I'm glad you're concerned - I'd be too (unless you run synthetic fluid, I suppose).
I'd be getting the big stacked-plate B&M (with screw-in fittings). This should really knock out a lot of heat. Also, if you have the lines going through the radiator's heat exchanger, for now you could consider bypassing those I suppose. Since I use a self-regulating stacked plate cooler (the FRPP version - it's too small for you), I dont run the fluid through the radiator's heat exchanger. I used to and the fluid was hotter like that (the radiator was putting heat into the trans fluid, not removing it. Then my aux cooler had to remove that new heat). In the winter it takes awhile for the fluid to heat up though (we both live in the desert so it's not too bad).
Anyhow, with all that money spent already, I'd plop down the 70 or so for that big cooler (put this fin-tube version in another car of yours) and not worry about it.