What the hell is going on with shops?

This is exactly the case. ^
We have, and know how to use the Snap on diagnostic computer and the code said it was the OD lockup solinoid failure.
Trans is a 46RE and the solinoid is accesible with the pan off.
We found the solinoid (aftermarket unit) $60 and he asked the shop what it would cost to drop the pan and put the customer supplied solinoid in.

So basically it is a trans service and swap out the solinoid while the pan is off.
No diagnosis needed, and of course no warantee expected for the part or if the part didn't fix the problem.

Why didn't your shop just put the solinoid in then?

If you're a shop, don't you have a trans shop that you have an existing relationship with? From shop to shop they are more likely going to go off another diagnostic.

Nonetheless, it appears the original estimate was about almost double too high. But we still don't have an itemized list of that estimate to see what was included.

That is a good gut check. I still think in transmission repair industry there are wide price differences from shop to shop. More so than in general repair.