727 with fmvb question

I'd be surprised a cracked piston in the high clutch drum could even function at all, but I have seen some odd things so I guess its possible because a cracked piston would undoubtedly leak.

If it were me, here's the order I'd do things

Drop the pan and make sure the valve body bolts are all torqued down properly (100 inch lbs). If any are loose you probably found the problem.

If none are loose I'd drop the valve body and do some air pressure tests, especially the front clutch circuit. If you want a chart on what passages do what I can post it. You apply 30-40 psi to each port and listen for them to engage and listen for any leakage.

Have you ever put it in reverse after it's hot and lost 3rd gear? If it's a front clutch issue you shouldn't have reverse either because it's one of the components that give you reverse.

How many miles on this transmission?