I saw the same problem on my mom's 89 TE. Of course it started acting up right after I sold it to her as she was driving home, to another state. I hadn't owned the car long, and the previous owner had gotten the transmission resealed.
Anyway, what I found when I pulled the whole thing apart was that one of the seals (there are two of them) that is on the "snout" of the front pump that seals the snout inside the K1 clutch assembly was leaking pretty badly. It looks like the seal was damaged when the previous tech re-installed the front pump during the reseal. It worked fine for a while, but eventually the seal kind of eroded and while it worked fine some of the time, the pump wasn't able to deliver enough volume to reliably keep the K1 clutch pack engaged.
I'm no expert on auto transmissions, and I wouldn't suggest that this is for sure what is wrong with yours, but it certainly could be. The good (if you can call it that) news is that if this is your problem you won't have to totally rebuild the transmission. If you pull the transmission, remove and reseal the front pump you will fix this. If this is your problem. Hopefully someone (you reading this C32AMG?) with more knowledge than me will chime in on this and know of something else that could be causing this that would be easier to check out/fix.
I'm sure I don't need to say this, but it is obviously better to avoid that shift flare when you can. The steels and friction disks in my mom's transmission left no doubt that the flaring gets them nice and hot.
I was thinking about it a little more and thought that perhaps the friction disks inside the K1 might be worn out, which could lead to the same problem. That too would be an easy fix once you have the front pump out. What you have to ask yourself then is if you just want to go and rebuild the transmission now that you have the whole thing out.

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Fourings

84 Audi Coupe GT with Turbo engine, EFI (buh-bye CIS), Jamex seats, Koni's/H&R's, e-code lights. 210k and counting.
1992 Anthracite 400E, 161k, "Grey Ghost".
1986 VW Quantum Syncro, 192k, gone to the crusher in the sky.
1989 300TE 172k. (Was mine, now also Mom's car)
72 280SE 4.5 (Mom's car)