What do you think...Bad trans, or bad converter?

I agree with the others that it sounds like the high (front) clutch. Dropping the pan should be an indicator. If it's full of sludge make sure and have the converter opened up and cleaned good and flush the cooler lines real well also. That friction material sludge sticks everywhere.

Edit: Just noticed TB mentioned the converter flush too. Sorry to be repetitive, overlooked it.