My 1988 Accord has developed automatic transmission problems. A bit of background:

After its most recent oil change (~3 weeks ago), I was driving it to work the next day and felt a distinct "bump" where there was no bump or anything in the road. It being a cold day, I figured this was just some mild hesitation and it didn't recur so I thought nothing of it.

Next day, same thing (not in the same place though). By Thursday I was getting it more than once (twice, three times) each direction. Friday it was OK coming home from work but on the drive to see my girlfriend it was stumbling a lot around 60 MPH at light throttle (every minute or so). If you gave it a bit of gas it would steady down.

Coming back from there, it was stumbling almost constantly and started losing all its power in D4. Pushing the pedal suddenly started resulting in an instant loss of power and a loud "zizz!" sound from the engine. Switching to D3 it was running steady on (which it continues to do) but we turned around and switched to her car.

It sat for two weeks after that while I debated what to do. Yesterday I drove it a couple miles in D3 to the Jiffy Lube that had been doing the oil changes. By now it was totally failing to engage in reverse and D4 when I tried to pull it out of Park (I had to push it backwards out of my parking spot so I could drop it to D3 and go forward). Jiffy Lube said the transmission fluid level was fine and had no other advice to offer. Drove it another few miles (~20) to the local transmission specialty shop. This one said they could hear metal grinding in the transmission when they drove it.

The shop's advice is the transmission needs a replacement or a complete rebuild. They quoted $1500. Given that that amount of money would just about buy me another '88 Accord, it's probably not worth it, but that figure sounds high to me for a straight replacement.

I have a call in to my mechanic to see what he thinks; in the meantime I figured I'd see what people here thought. What's a good line above which it's just not worth it? A further consideration is my future grandfather-in-law, who's an expert garage mechanic. He's done engine replacements and overhauls on various domestic cars he owns; would replacing the transmission likely be in his skill range and if so would it be safe to drive this car in D3 the 160 miles to PA to do the job in his garage (and at what speed)?