It sounds like a valve body problem....I had the same problem on my 98 Tahoe, and is a common problem on all 4L60E trannys. You probably lost TC lockup too right?
Basically the PCM is detecting torque converter slip because the lock up valve in the valve body is worn out and is leaking fluid past it. When it does happen the PCM defaults to the max pressure settings....and that's why you are getting the very hard 1-2 shift. I'm not exactly sure what events need to take place before it sets a code, but if you shut off the car for awhile it will go away until the process repeats itself when you start driving again, as long as the conditions are right. Sometimes it may not come back, as is the case with my Tahoe.
I suggest you contact
www.teamtripp.com. He'll tell you more than you need to know about this stuff. He also remanufactures valve bodies that will fix the 1870 code and sells the Trans go shift kits that takes care of this too.....which is a lot cheaper than a new transmission.
