Like Phil says, you've got to get that idle under control before you go much further. Something's seriously out of whack to idle anywhere near as high as 3,000, even 1,300 rpm.

a) Have you been doing any work or adjustments around the throttle body or on the intake side?
b) Is the throttle able to close? The tip of the adjusting screw should be touching the stop. The throttle plate could be binding in the throat. Check at the throttle spindle to make sure the throttle cable from the pedal and the kickdown cable to the trans are not restricting travel and that both are properly seated in their grooves in the spindle.
c) Can you hear the throttle position switch (TPS) click just as you begin to manually open the throttle and again just as you close it?
d) Are the connectors properly seated on the TPS and idle air valve (IAC)?
e) Is the wire to the engine coolant temp senser (ECT) connected? The ECT is below the intake manifold, back between runner #3 and #4.
f) If there was unmetered air to get that high then I'd expect a very poorly running engine. Is that the case? Check that both hoses on the IAC are connected and not split. Check that the accordian intake air supply hose isn't split in the folds, especially check underneath. While you're at it, check the PCV hoses on the throttle body, flame trap and that the flame trap is properly connected to the oil separator box.
g) If all that checks out, then you need to start diagnosing, beginning by confirming TPS operation and that the ECT is providing a proper reading.

2) As for overfilling the trans. It's not at all good for the trans if run that way for any great time and can cause serious damage. Fluid flow is affected and can cause shifting problems, such as slippage between gears and rpm. The trans fluid will foam up and thicken, possible forcing fluid out of the pan and other seals, providing poor lubrication and fluid flow, with gears overheating and eventually damaging all kinds of things. Trans fluid level can be checked cold, it just won't be accurate and will read a bit low.
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Dave -still with 940's, prev 740/240/140/120 You'd think I'd have learned by now