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I can vouch for the fact that the DIC complains at 260. Got there at the track. Mine runs in the 200s most of the time. I'm putting a cooler on it to help with temps on the track.
Most trans information data out there says that any temps over 200* for an extended period of time shortens trans life-----
There are several things you can do to get the temps down down--
1st--install a 160* thermostat----The stock is 195* On a C5 the trans has a bulit in cooler in the radiator So if you cool down the coolant temps you also cool down the trans fluid--- BUT you must re-adjust your fan setting or the results are minimal--I have mine set at
#1 on 200 --off 196
#2 on 207---off 201
ALSO in addition you can by-pass the trans cooler in the radiator completely !!! Common practice--Mine runs another 5-10* cooler plumbed that way
Finally---If you bypass the trans rad. cooler--and install a 160* thermo and it's still running hot ( because of a stall converter) for example --Install an aftermarket trans cooler---AND not a cheapie tube and fin style but a stacked type ( looks like a mnii radiator) on the raditor shroud------
PS---A 160 thermo won't let the eng run that cold--It usually results the coolant temps to be around 180* on the freeway or on a cool day and on a hot day or in town never over 200*