So, we just came back from AAlltech Transmissions, they've been doing transmissions for a looonnngg time now, so we pretty much trust them.
What he explained to us was that there must of been bits and pieces of the transmission floating around the oil
Since the tranny failure was overnight, the metal pieces must have gotten clogged in the filter not allowing oil to pass through while the oil set. That apparently caused some mechanism in the gearing to rub metal on metal making it lose the grip needed to grab onto gears.
So what they are going to do is replace all the seals, replace the broken mechanisms, might change the torque converter as well if necessary.
Price quote in the 2G's section.