Well the rpm surge is from the torque converter which I am sure you know...so I am no help
But its definitely strange that it will not stay locked/and keeps jumping back and forth. Not that I think it has anything to do with it, but have you adjusted the custom options on the TC unlock/lock?
Just wondering...I know you said in OD only, but have you turned it off and seen if it will do it in just 3rd gear?
Maybe someone that knows a lot more than me will punch in...Good Luck man