I taught the GM repair course on the 700R4 for several years. There are actually 4 different shift strategies involved:

1. Direct drive (3rd. gear) converter clutch unlocked
2. Direct drive converter locked
3. OD (4th. gear) converter unlocked
4. OD converter locked

The converter clutch is a 1-plate disc inside the torque converter with a friction surface about 1" wide. It is ONLY intended for light-load situations to eliminate the 10% slip built into all converters. Any low-vacuum conditions should immediately disengage the converter clutch to prevent the fuel system from going into "power" mode and destroying gas mileage, and avoiding internal damage to the converter clutch.

Attempting to use the OD while trailer towing results in repeated engagement/disengagement of the overdrive, with resulting overheating as the OD cycles in and out of engagement.

BTW, there's nothing new about lockup converters. The 1949 Studebaker had one on their automatic transmission, and the 55 Packard Ultramatic also had that feature.
Jerry


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