I think what he means is that the gears are changing when they should, but he doesn't hear it rev-matching (blipping throttle) for the downshifts, and doesn't feel the engine-braking effect from it.
Both are pretty subtle if you're just coasting down to a stoplight on the brakes and letting it downshift for you. Have you tried downshifting aggressively in manual-mode on your own? For example, get up around 60mph in Manual mode in 4th gear, and then click for downshift to 3rd. The engine revs should blip up substantially, and if you then let off the gas pedal completely, you should feel the engine-braking slow the car substantially as well (a lot more than the gradual slowdown you'd feel coasting in neutral at that speed).
The 7AT is a complex beast with hundreds of precision parts. It wouldn't be all that surprising if something in there was damaged in a major impact.
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