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I believe what is happening, is this.
As ATF degrades beyond it's useful life, it begins to "glaze" the various friction components of your transmission. The friction components are, primarily, some fiberous surface working against a steel surface, exactly like brake systems. The "glazing" is the filling-in of the pores of the fiberous surface with the by-products of the breakdown of the ATF, resulting in a reduction of the frictional properties of the those surfaces.
At the same time, as the ATF degrades, so does it's ability to lubricate between the frictional components, thereby increasing the friction between those components.
We have a situation where one by-product of the degrading ATF causes a loss of friction and another by-product is causing an increase in friction. These two factors offset one another with most drivers not noticing the developing problem. There is probably an accompanying decrease in the capacity (ultimate power transmisability) of the transmission but, under normal driving circumstances, most people would never notice the drop in capacity.
Now, you flush your transmission and restore the lubricating properties of your ATF to optimum, but your friction systems are glazed and what results is an apparent transmission failure.
Although the failure is a direct result of flushing the transmission, flushing the transmission did not CAUSE the failure, it simply revealed it.
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