Be very careful with any water left over in the trans cooler lines. Water in ATF will attack the glue used to attach friction material to the clutch pieces and will easily destroy those assemblies.
Flushing with ATF is a good idea, though it may miss some water collected at low places and float over it (water is heavier). You may want to consider running compressed air beforehand to try to dry out the moisture first. We're in a heat wave (at least where I am). You may want to bake the radiator all day in the hot sun. Anyhow, use your creativity and do whatever it takes to get the moisture out.
I spend lots of time doing the prep on sealing surfaces, such as head decks. This is because I insist on doing jobs ONCE (no redos!). After careful scraping of gasket material and a good inspection, I like to finish the surfaces with Scotchbrite wetted with oil. Make sure not to nick the surfaces. Don't rush through this job. And don't take any shortcuts.
95 E320 Cabriolet, 131K