Need tranny help
 

Hello everyone, I've been reading these posts for some time now and thought I would go ahead and post a question for the experts.
I've got a '79 300cd, 156,000 miles, and a "bad" transmission. I had been driving the car on the interstate when it started to surge and feel like it was jumping out of gear but the rpms didn't go up, felt like a drag or something, I thought it was the engine at first, like a fuel filter plugging up or something. Anyway, about 10 more miles of this, then a little loud grinding, a few heavy clunks, then nothing, no forward gears, no reverse, nothing. I was getting ready to pull the transmission and pulled off the pan and I found bright red, clean fluid, no junk in the pan at all, no pieces, very very little friction material (about 1/32 to 1/16 if that). Is this normal? Do I have a dead transmission, torque converter, or what.? I don't want to throw 1200-2000 dollars at it if i don't have to. Any suggestions?