While going up a steep hill with the car loaded down and the O/D engaged (which I now know the hard way was not the smartest thing), the trans resisted going into the highest gear/od, slipping back and forth. I pulled over, stopped, restarted the car, and the O/D light has been flashing. Car not driving the same at all. It won't get out of first until about 25 mph and 3000 rpm. Local trans shop told me 2nd and 4th gear are gone, $2600 for a whole new transmission. My questions are these:

Is a whole new trans really the only fix? Maybe on a car this old it is the "safer" fix?
Is that a decent price? (I know these things vary depending on where you are, but is that ballpark?)
This local shop has a good rep, but would an evaluation from the dealership service dept. also be worth it? They won't compete on price, I don't think, but might they have another opinion on what all to do?
And if you've had an '01 trans replaced, how has it held up?

Thank you for any thoughts.