I think it has to do with the seals/gaskets in the transmission...the internal pressure just drops and the fluid goes to the bottom of pan....
Sort of, kind of. The main cause is the saddle bearing that supports the tail shaft. The transmission shaft end is a milled aluminum carrier bearing. The bearing block has a hole drilled into it to a specified depth. At the end of
this is a bushing disc placed at the end of the hole to support the spinning transmission shaft. There's no sleeve around the end of the transmission shaft which ends on the bushing. As it wears over time, the transmission shaft then wallows out the surrounding aluminum case. It eventually gets wallowed out to where it can't support the internal pressure, effectively acting the same as a suddenly-failed seal. That's why virtually all of them failed the same way and within the same timeframe (some went at 200,000 or even earlier, some have gone more than 500,000, but those are the rare exceptions).
Silverstar created a fix for it in 2007 and rebuilds from MB manufactured after 2007 should have the same fix, so any of those replacements shouldn't fail for the same reason.