Finally, someone using logic and pressure gauges to diagnose a trans problem.

Just so we are using the same terminology, Working Pressure = Line Pressure? ( the highest pressure in the trans, it comes directly from the front pump. )

Random high fluid levels that don't have obvious foaming are caused by the torque converter not being charged. ( filled with fluid under pressure ) This one of the reasons for no drive and can cause poor acceleration until it fills.

Given you have a drop in modulating pressure and seemingly loss of torque converter charging, I'd lean towards a line pressure regulator issue. Loss of line pressure will result in loss of pressure to apply clutches / bands, it takes a while for the converter to empty so the fluid rise might not be immediately apparent. Shutting the engine off allows the pressure regulator to move towards full pressure.

Does this trans still have a rear pump installed? There are a few check valves in the system to prevent front pump pressure from spinning the rear pump
when it is disengaged. However I'm not sure there would be a large enough internal leak to cause the symptoms you are having.

As for fluid color, if you can see through it you don't have much or any water mix. Water will cause the fluid to become opaque and more towards white. Sometimes in early stages of water mix, you will have bubbles that won't pop. ( water droplets floating in the oil)