So when you called did you ask about the failure point? I've talked to Level10 before in the past and they were pretty up front with things and were great at explaining things when asked. You can cut the cost by ordering the rebuild kit from them and getting a local trusted shop to do the rebuild if that is an option. You can order the
VB, TQ converter, and rebuild kit from Level10 for just under half that price. Past that you would be on your own to pull the tranny and take it to someone you trust so cost will vary.
Literally someone in this thread said "Nope, I never asked pat@level10 but he said it was shot..." which is directly linked to your question of "What was the critical failure mode?". But if you did call Level10 and asked, because honestly a highly trained professional will give you a more direct, honest, and explanatory answer to your question then 90% of the people on this forum (in regards to that exact question just due to experience and expertise) in relation to our auto transmissions. But damn, if their answer to you was "give me $6k for the answer" that reflects mighty poorly on their customer service.
You are doing no different here asking the members of this forum for the answer then picking up the phone and asking people that actually work with our transmission frequently; the difference being the trained professionals at Level10 most likely have the answer. I would hope they could answer questions rather than just say "give me money" and not answer anything in regards to their products, services, or the like.