Foaming fluid certainly points to cavitation. Did it continue to foam after putting it in neutral? I think Kim is onto something with the milling of the pump stator support. Pump gears being .0035 down may be an issue. But I don’t have the specs in front of me of what is considered acceptable on this measurement to be certain.
No, the trans fluid settled down when it was cycled into neutral. after the unit lost power transmission the transmission was over full. When the unit was pulled the converter had hardly any fluid in it.