2-3 Shift flare up in a 904...

I use a 5.0 lever and don't have this problem. I've also seen it in stock trannys. The problem is either an early band release. You may be bleeding off pressure on the front band apply servo. I've seen some with sand holes in the bore or even excessive wear in the servo bore. Other things could be a late high clutch apply. Reasons could be a loss of pressure in or to the front drum. One of the most common causes I've seen for this is a front clutch drum that has the inner piston seal groove cut too deep so the seal lip doesn't stick out from the hub. In other words it's not sealing to the front clutch piston. You can check this when you pull it back apart, take out the front clutch drum and remove the clutches and steels. Take the spring and retainer out (you need a compressor, don't just try to pop the snap ring out). When you pull the piston out run your fingers across the inner hub on the drum and see if you catch the seal lip. If not there's your problem.