Did a quick search of the forums, didn't find what I was looking for. Apologies if I missed it.

When my Escape is in 4th gear I can feel it "bump" and "hesitate" (every 1-2 seconds) like it's trying to downshift to 3rd but doesn't quite make it. I don't believe it's an ignition or a fuel problem because I've replaced plugs and most of the outer ignition system already as well as the injectors and fuel filter and PSI tested the fuel system. The problem only occurs when the transmission is in 4th gear, not in any other gear or engine RPM. I am absolutely 100% confident that I can isolate the problem to when the transmission is in 4th gear. I believe so because when I start feeling the "bumping" in 4th gear I can press the "Overdrive OFF" button on the very end of the shifter column (forcing the tranny into 3rd gear max) and the problem goes away instantly.

I have no evidence that the torque converter has gone bad or is slipping. I have burned out a torque converter before and its nothing like this. I have put the column shifter in both 2nd and 1st and when I put the hammer down from a stop I detect NO slippage at all.

A guy at work who builds racecars for a living says my problem is in the "valve body" of the transmission. Can anyone verify that? What does it take to fix/replace that? Can an amateur with basic tools do this kind of work?

So what do you guys think?

 

I was thinking valve body as well. Try "Lucas Oil Transmission Fix". It just might loosen up that sticky valve and make it work again. If it does not work you are only out a few bucks.
I don't know how difficult it is to replace a valve body.