Dear Chevy,
Ok, air test 101. When you air tested the servo apply, did it sound "tight" or were you getting a lot of blow-by even though the servo applied? There will always be leakage but a slight hiss is not the same as the air just dumping. How would you describe the apply test?
Next, the backing off of the band 1/2 of its proper setting is a cheat. The servo and lever are designed for the 1.5 turn backoff. I never suggest the 'tighter' setting as it is not necessary.
Flaring into 3 from 2 indicates another source of problem: high clutch piston seal. If the pressure is leaking past the rev-high piston seal then you are delaying engagement of high as the servo is de-applying.
Did you per chance run the full suite of air tests I listed? If not, go back and air test the whole banana and let us know.
IlovChvy
p.s. I heard that TH400s are better than C6s anyway.