I have a 89 formula 350 with a 700r4 tranny and when i am cruising somewhere in around 2rpm when it shifts to third there is about a 2-5 hundred rpm rev between the shift. What could this be? I also have a small leak on the front main seal. could this have anything to do with it revving?

 

This is called a Cutloose. Could be from the leak, could be from calibration problems, adjustments, etc.

 

I am thinking of rebuilding my tranny myself and putting a shift kit. I dont have any knowledge of this. Is it really hard or would i be able to do it??

 

It depends on your level of mechanical ability. You need to get good manuals and become really familiar with what you will have to do. You must also invest in some quality jack stands and a jack. Saving money isn't worth risking your life.