Dave;

Joel will check this at some time today and will have the answer for you or you can PM him so he is sure to see it.

Dave, what may be happening, is the end-plugs for the O/D valve in the valve body may be leaking. This would create a leak in the pressure to the valve when the fluid is warm/hot/thin, but not so much when it is cold/thick.
It may also be a bad/leaking solenoid, on the valve body. The solenoid(s) can be changed without removing the vbody.
The '89 should have an A4LD trans...non-electronic, but it does have two solenoids: one for O/D, and one for the lock-up.
A downshift from O/D to third is a big rpm jump, but the lock-up going off is not so much a jump, usually only a couple hundred rpm.

Joel is the non-vette transmission problem man

Joel;

Actually, Dave, the chances of it being a bad solenoid is greater than an end-plug leak. We see a ton of A4LD solenoids that fail in several different manners. There are prolly 10 different "up-dated" solenoids for this unit, by different manufacturers. The solenoid is "open" when off, allowing fluid to pass thru. When it is commanded on, it closes, builds up pressure behind it, and this pressure is what strokes the shift valve. If the valve leaks, it can cause a loss of pressure great enough to allow the shift valve to move back to the "rest" position, canceling O/D.

Another thing...you stated that, once it goes into O/D, and you manually put it into 3rd, it will stay in 3rd, regardless of shifter position? Does your truck have an O/D button on the shifter, or does it have the PRND321? You may well have a failing NSS(neutral safety switch) that can cause it to drop out of O/D.

Joel;

Dave, you may want to have someone check the coolant temp sensor, also. The ECM logic is such that it could cancel O/D if the temp is too cold...or it thinks it is too cold. Yours seems to be working just the opposite!

Also...after sleeping a bit..I realized I told you a lie...
On the A4LD, you cannot remove the solenoids without removing the valvebody...you can on the later, electronic 4R44E/5R55E..which is what I was thinking about when I said that earlier. I'm terribly sorry for the incorrect info on that. I shall now go beat meself even sillier about the head with a wet sparkleplug wire. Adams' Apple2008-01-28 10:40:52

No problem there Joel, your as human as the rest of us, just with a whole heck of a lot more automotive knowledge.  At least i have 2 things i can check/change out before i get there.  I am going to look into that temp sensor first off, it seems so logical.  Then, i am going to do the NSS.  If it aint one of those two, off to the rebuild it goes.  Ronda loves that truck, and I have to admit, it sure has everything you could want on a truck, so investing in rebuilding a trans is worth it.  And, now, thankjs to you, I know somewhat what i am talking about, so a whole lot less chance of being ripped off.  I will make sure they replace the solenoid, even at an extra cost if necessary.