The early Chevy transmissions had bushings in the cluster gear and with hard use the bushing slipped from the front of the cluster toward the back, this let the gear slightly disengage and automatically removed the teeth from both the main drive gear and the cluster. Later (I think around '52 or '52 the improved transmissions had needle bearings at both ends of the cluster gear, making them less prone to failure. The way I broke dozens of transmissions was to "speed shift" from 1st gear to 2nd. I could keep the throttle floored and a quick "dip" of the clutch would allow enough time to cram the shift lever from 1st to 2nd, and very often break the trans. When I had a GMC 270 built up in my '39 Chevrolet I broke so many transmissions I carried a spare in the trunk and several times changed the trans at the curb. The bottom line is this, the stock (with needle bearings) 3 speed trans. will easily handle the 261 engine, but DON'T speed shift it!!
I am gathering parts to change the Hydramatic in my '54 GMC to a 3 speed, and the built up 248 engine will work fine with that setup.
