Tranny hangs onto first gear too long
 

Hey all,
I'm new to this forum but belong to hd forums. I just picked up an '86 silverado K-10 with @118k miles, 305 w/Holly 4 barrel hooked to a 700R4. When accelerating I have to floor the pedal then let off to get tranny out of first, then it seems go right into drive. I stopped by a local trans shop and the owner came out and checked the fluid. He said it smelled burnt and I would be looking at @ $1400 rebuild or replacement. If I replace should I stay with the 700R4 or go with a turbo 350 or 400? Also the mechanic said an '87 to '91 tranny would be better built because of dampeners the factory put in. Any feedback would really help.
Thanks, Mike