TF 904 Auto slipping 2nd to 3rd when manual shifting @ higher revs

Hate to rain on your parade, but I think the damage has already been done. Whether the damage is due to insufficient line pressure at WOT or the trans is just worn out from a lot of miles.
In my opinion, the trans should not spin up on the 2-3 shift even with the KD disconnected. It would eventually fail with continuous use like that. I suspect the front clutch is worn or seals leaking & it is slipping under WOT load.