727 no 3rd

Sorry you are wrong sir. Low and reverse share the drum. Not high and reverse.

You sure your not thinking of the Low/Reverse band instead of a drum. :D

I think it's a VB issue also, like springs mixed up or an out place check ball because of the mention of it feeling like it goes into neutral and back to second.
It might be trying to go to third and not able to engage it could cause a freewheel momentarily till it kicks back to 2nd.
Hard to tell without actually feeling it in person.