This is kind of funny; the exact same thing happened to me, having no problems then BOOM! Your intermediate one-way clutch probably blew up. I'm rebuilding my AOD in my basement right now, as a matter of fact, with the help of the Haynes manual. The only special tools I've needed were 2 C-clamps, a short piece of 1x2 wood, and three sheets of that plastic they use for projector transparencies (college prof gave me a couple pieces) to get the pistons in without cutting up the seals. Other than that, a socket set (all metric), a couple of flat blade screwdrivers and creative ways of getting the front pump out are all that's required.
If you never want to do this again, I'd highly suggest at least some modest upgrades. Getting the "A" overdrive servo is the first thing I'd get. Go
here to find out the part numbers you'll need, plus a whole lot of info on the AOD. Then buy a quality rebuild kit and a B&M shift improver kit.
Now, I don't suggest this for everyone, but I'm going ballz to the wall with upgrades, like a wider OD drum and band with a ratcheting one-way intermediate clutch (Ford is calling it a mechanical diode). I'm thinking about the stamped direct clutch and the DYNAX intermediates. I'll need it for the kind of power I plan to stuff though it. Oh well, hope this helps.
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Capri306, Moderator, The Mustang Works Online
1979 Mercury Capri, 5.0L -- C4 -- 2.73
1987 Mustang LX Notch