I've rebuilt mine and it's been extremely reliable so far, even with hard 2nd-gear-chirping shifts. While you're doing the rebuild (here's basically what I did), install a B&M shift improver kit, a BIG tranny oil cooler, and a higher stall torque converter (2000 works great with my setup) that retains the lock-up feature. If you get one that doesn't lock, you'll be hating life at the gas pump.
AOD rebuilds are pretty straight forward. Nothing major in the way of specialty tools are needed unless you consider a 4 inch piece of 1x2, some screwdrivers, a few sockets, and two C-clamps special.
Oh, be sure to pick up that Haynes transmission rebuild manual at a parts store. It covers everything from C3's to the AOD, so it might come in handy in the future. The best piece of advice I can give you is have a CLEAN CLEAN CLEAN large flat area in which to open it up and "spread out its guts." I used my old ping-pong table in teh basement covered with plastic and newspapers. The parts literally almost covered the entire table and trans fluid was everywhere...that was my own sloppy fault though.
Replace and and all parts that are even questionable you discover. If you don't replace so-so parts now they will puke on you when you least want them to.
Any decent rebuild kit is going to come with all the clutches, steels, piston seals, gaskets, possibly a converter bushing, and the OD band. Once you get it apart you'll quickly see what failed. Your OD band probably looks like overcooked KFC. If you want to learn how to avoid problems in the future and make your AOD stronger than everybody thinks it should be (hehehe), go to
Baumann Engineering to learn everything you could ever want to know about the AOD. Be sure to get the "A" OD-servo from Ford and check your direct clutch drum.
Another good place to check, if you have the $$$, is
Lentech Automatics. These are probably some of the best aftermarket valve bodies out there, and most guys here will tell you that their customer service over the phone is outstanding. Sure their Street Terminator Lockup is $500, but it's worth it in the long run considering the alternatives. Unless you like shifting through the gears of a T5, that is.
Read up on every bit of information you can find, and feel free to email me if you have any particular questions about it. If you can assemble a kid's swingset, you can rebuild your transmission...suppose that's the best way to summarize it.
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Capri306, Moderator, The Mustang Works Online
1979 Mercury Capri, 5.0L -- C4 -- 2.73
1987 Mustang LX Notch