The pan was very clean, but the two magnetic drain plugs did have some metal particles on them. I have a spin on oil filter in the cooler lines before the trans cooler. Yeah, the shaft grinding thing was really strange. It is a new one on me. The two shafts are close together may be a 1/4 inch or so. If things get out of whack, I could see some grinding might happen, and did happen.
I have a theory, may not be correct, but the way I understand it is that under load in forward gears the gear train is forced to the back to the number 9 thrust washer. I would guess the output shaft also. So going forward no problem with input output shaft spacing. Same in neutral and park. But in reverse the gear train is forced toward the front and may be the output shaft also.
This puts the load on the brass stator support selective thrust washer. and also brings the output shaft closer to the input shaft.
Normally not a problem unless the input shaft is sticking out of the forward clutch drum too far as what happened here, and the shafts come together. the input shaft is going one way and the output shaft is going the other way. I would think that if this happened the output shaft would just push the input shaft back without any grinding.
But if the driven member in the torque converter is pushing against the input shaft with enough force, the two counter rotating shafts start the grinding process and cause the transmission to bind up in reverse. The more throttle you give it the harder the driven member pushes against the input shaft causing even more friction between the input shaft and the output shaft making the bind up even worse. Now only full throttle has enough force to overcome the bind up and the car then more less goes backwards.
This may not be correct, but it is just a guess based on what I have experienced.
Feel free to correct me as I always learn something new every day.