Ok,
This is not my truck but it is my father in laws vehicle. The truck had issues with the tranny shifting of some sort about 7 months ago. A shop installed new shift servo(s) and it fixed the trouble. I believe it had a CEL with shift trouble but I am not sure as I did not do it. He came down from NC to our house for Christmas and was headed back home today. He was running about 75MPH and heard a whooshing sound followed by smoke. He stopped and tranny fluid was all over the back of the truck and from the drivers seat back on the belly.

He got off the highway and called, I told him to check for a fluid leak and to fill the tranny back up (stated the fluid was just touching the stick). He did and fired it up and nothing was leaking other than the fluid dripping off the frame. He filled the fluid and drove slower headed back to our house (approx an hour drive). He said the tranny shifted fine and gave no troubles coming back. Once I got home from work, I got to look at it.

The tranny fluid smells terrible, very burned and brown. There are no large chunks of metal in the pan but the fluid in the bottom has a glisten like a metallic paint job on a car. I drove it up the driveway and onto ramp stands prior to pulling the pan. Now, I am 99% sure the fluid boiled in the tranny and blew out the overflow tube as the tube is pointed at the floor board and that is where the wetness of fluid starts.

Is there a cause that is non-terminal for the transmission in this case? I know it's doubtful since the tranny was nuked but I am a blue-oval guy and have not messed with Chevy stuff much more than I ever had to for friends. I'm mostly wondering is there is a failure these trannies suffer from that cause a sudden overheating/burn that is repairable or should we start looking for a junkyard replacement?
Cash for clunkers filled the local yard up with Blazers from what they told us today, when we called about parts/prices for the tranny, so finding one is easy. He'd like to get headed home but is kinda stuck here till I fix the truck. Lucky for him I'm a mechanic by trade :)
I could rebuild his transmission if I had the tools needed so I am not a novice at this. I'm just hoping for a "valve X is stuck closed" kind of information, to point me in the right direction.

Ok,
Next question, will a 1998 blazer 4x4 tranny work inplace of this 1996's?