Bill, is this a standard 727, like the mass produced ones. Or is it a push button?
I have a B&M shifter in my Duster. The cable suffered the same fate on the header. I simply replaced it. I did think about what you are describing and "Patch it" with a sleeve and wrap it tight.
On tranny fluid being in the sleeve of the cable, not on my B&M or anyother I seen.
The speedometer cable is also fluidless, but, it could get in there IIRC, your right, there is nothing to stop it from going up the cable. But there is no pressure line to feed it. Inside theres a dry power, film/coating.
(OK, I'm reaching here a tad.)
I can not think what it is called. From what I remember, it is a dry lube for the speedometer cable.