I've tested the modulator and it holds vacuum as long as one could want and there is no fluid getting past the diaphagm.
I also took her on a long drive and made a point to encounter as many driving situations as possible. Looking back on it, I feel lucky not to be sporting a citation from the local enforcement

I found a way to make it shift perfectly smoothly every time. I know the car well enough to predict every shift within a half second or so. If, just before an upshift, I back off the throttle and effectively slam the modulator with a heavy dose of vacuum, it's perfect. Downshifting on decel is equally smooth. Again, a high vacuum situation.
So, it seems that low vacuum, when the throttle is opened any appreciable amount, directly coincides with the stiff shifting. The only thing my pea brain can latch onto based on this is the modulator.......even though it holds vacuum just fine. Are there any other failure modes? I probably should just replace the thing but I really hate to just pitch a part at the problem even if it is only $50.
I know there are some great Benz tranny tuners out there. Any and all ideas/ suggestions are appreciated and will be acted upon.
Sam