lost third gear

(71 duster, with a MRL 408 in it, 727 out of a 75 motorhome, promatic II shifter and lokar kick down linkage)

so recently ive noticed a slight slipping issue on the 2-3 shift
very little, and not enough to concern me
I double checked the adjustment on the kickdown cable and noticed the throttle bracket had loosened up, and this put extra slack on the kickdown
when I tightened everything back up all seemed well


until this morning, under hard acceleration, I shifted from 2nd into 3rd and the engine bounced of the rev limiter

the rest of my trip I had to get up to speed in 2nd to be able to maintain that speed in 3rd
I was not able to gain any speed in 3rd

when that also failed I put her in second and just drove her home like that (not too bad, with the 3.23 gears)


I checked the transmission fluid and it is dark red, not brown, but certainly not "fresh from the bottle bright" red

it also had a burned smell to it
(this is my first automatic transmission and I wasn't sure if I would recognize the burned smell everyone always enquires about, but it was pretty obvious)



so, what happened and what should I do next?