He's full of it. I've never seen one fail that wouldn't allow the car to be driven. Short of running it totally out of ATF, so that something seizes, you can hardly kill these things. They're cheap on the junkyard market for that reason: little demand.
I've driven many of them with well in excess of 200K on them. Among my immediate family and friends I can count a half dozen good running AW70 equipped cars, all on their original transmissions. One, my 91, needs an OD solenoid right now and once that's fixed it'll be back to normal.
There are cases where the OD does fail completely- I am pretty sure a lot of these cases are due to dirt getting into the small passages of the OD solenoid and valve body, possibly due to very dirty fluid or dirt intrusion during other servicing. None of these that I've seen immobilize the car- lack of OD (4th gear) simply limits your speed to about 80 mph. Hardly the kind of thing where you can't get home.
I would not put any credibility in what the trans shop person said. It is possible they are thinking of one of the other problematic Volvo transmissions. The 740's up to 87 have a ZF 4-spd auto that can strip internal splines without any real abuse. The 1993 850 has a fatal flaw in its transmission causing the case to crack, which is irreparable. Neither of those failures apply to the Aisin-Warner AW70/71/72/L models.
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Rob Bareiss, New London CT ::: '87 244DL/M47- 225K, 88 744GLE- 209K, 91 244 183K. Also responsible for the care and feeding of: 88 745GLE, 229K, 88 244GL, 146K, 87 244DL, 235K, 88 245DL, 236K