The 2-3 shift valve (357) or the 3-2 manual downshift valve (356) is stuck or binding.
close, but no cigar. what do you call it when you punch it and want to go from OD to 3rd gear? used to call it hitting the passing gear. but that was when cars did not have OD. you would cruise in 3 and hit 2nd for passing. i can force it into 3 on the highway. so 3 does work.
the 97 has a vacuum fitting, in 98 that went away. pretty sure.