If it is the same setup as the 85 300D on the other side of the Piston is a Lip Seal and a Bushing.
I do not know enough about the 87s to know if you have the most updated B2 Piston and Bushing in your Transmission.
My 85 still had the Metal Bushing (replaced by a Nylon/Plastic one).

If it is easy to get at when you change the O-ring; I think I would at least inspect the B2 Piston for wear marks and see what type of Bushing it is using.

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84 300D, 82 Volvo 244Gl Diesel