Is the fluid reasonably fresh, i.e. changed some time within the last 20,000 miles? Did you check the level after a 10+ mile drive with the engine running?
Intermittent flaring can be caused by dirty fluid. (I had intermittent flaring in the 2->3 shift but the other shifts were fine. New fluid fixed the problem for me and the shifting has been fine for the last 20,000 miles, save for when the vac modulator died. (A failed diaphragm in the modulator will make the shifting very firm.)
1987 300D 201k