A higher stall converter won't cause a tranny to blow up. They do create more heat IF you are putting it under a load a lot, (pullong hills, power braking, etc.), but under normal driving conditions, they don't cause trannys to blow up.
Make sure your tranny cooler is clean & not obstructed, or simply install a larger after market cooler in line, (or in replacement of), with your existing radiator's cooler so you don't end up with that same problem again.
Also, MAKE SURE you flush out your tranny cooler & lines or the debris that the tranny made when it let-go will still be in there and will end-up in your newly rebuilt tranny and cause it to have problems too.
Sounds to me like your tranny was original and would have probably let-go sooner or later anyway, simply because it was old or because of the loads the new engine put on it.
C4's are plenty strong in most situations. 99% of the time, you'll break the tires loose before you can put enough load through the tranny to break it. You "can" build a C4 to handle 1,000+ HP, but it gets VERY costly. We have a twin blown, twin nitroused 66 Fastback that dynos at just over 700HP (without the nitrous) that has a C4. It ain't a drag car but it runs 10.90's @ 127 MPH (again, without the nitrous) on standard 15" street tires. It launches like a slug simply because it ain't set up for drag racing, but it has a VERY built C4 with a 3,500 stall converter that has been in it for years. If you want to see it and see a video if it running a low 11 quarter mile time with a horrible 2.7 second 60 foot time, click on our web site link below and look in our Ford gallery.
If you have a healthy cam in that engine, you WILL need a higher stall converter if you want it to perform well or not bog like a turd of the line. Don't let anyone tell you that your converter's stall blew up your tranny. If it "cooked" because of too much heat, (which I would find hard to believe unless you had a 4,500 stall or above in it), then that might be a different story, but ANY time you install a higher stall converter (2,800- 3,000 RPM and above), you should use some sort of additional tranny cooler.
Hope that helped