727 3rd gear feels more like a down shift

No the hydraulic circuit on the 2-3 doesn't work like that.
My guess is the KD servo is nor backing up. Could be mechanical, could be hydraulic.
It could also be low pump pressure at low-rpm, but I doubt that.
So it looks like a pressure test is in order.You'll need a factory FSM to figure out what to hook where and what the numbers should be. A Torqueflite hydraulic flow chart will be very helpful.
I assume your governor circuit has been defeated, and the VB is a full manual shift, meaning that there is no longer an automatic upshift mode.

In the meantime, you could try backing off the KD band adjustment. But before you do, you need to see where its at, cuz if you back it out too far, the actuator inside, falls apart and then you have to take the pan off to re-install it. That sux,lol. I don't know what the max looseness speck might be, but I'll guess you'd be Ok at up to 5 turns from snug.The normal adjustment is 2 to 2.5 turns from snug.