Tried the Lubegard suggestion below and took the car for a ~70 mile drive. The trans shifted fine getting to the freeway which is about 10 minutes of normal city driving. Once on the freeway it did well too, it shifted without issue into the highest gear. At several points during the trip I manually downshifted then shifted back into into 'D' and it always shifted back, although a few times not quite as quick as I would expect.


At the end of the long drive coming back into town it started acting up again. Once I was off the freeway and back to city driving it started downshifting two steps (I think into second) and wouldn't upshift. I could put it into neutral then back into 'D' and it would go into the right gear, but then a few seconds later it would downshift again.

One thing I noticed is that the ATF I dropped to make room for the Lubegard looked pretty dirty, i.e. I didn't see any metal in it but it was murkier than I would have expected it to be. I haven't changed the fluid since owning the car so I'm wondering if just having old fluid could be causing problems. I plan to change the fluid asap and re-add a bottle of Lubegard to see if it makes any difference.

In my experience it needs about 150-200 miles to really see the benefits but if you saw some improvement it means that there is hope...
It seems that your existing fluid is worn out so like you said, change the dirty existing fluid with some new Dexron III (don't forget to drain the torque converter too it has a allen plug screw to drain it) and add a bottle of the Lubegard and it looks as if it may solve your problem. These 722 series ZF transmissions are actually garbage, they rarely go beyond 100K without problems (i am on my 4th one...) but that additive has been very helpful in my experience.