Never heard of the lines getting pinched. Are you sure that the fluid is all the way up? The idea of pulling off the lines and checking them is a good idea but only pull off the outgoing line on the cooler, you want to make sure you have good flow thru the cooler. Whats your engine temp doing? If the tranny temp is really high then it will force up the engine temps as well. I don't think its overheating though, to overheat enough to stop the tranny is would usually boil over or it would smell burnt.
Wanna make it a 4x4? I think I have everything you need to convert, tranny, t-case, driveshafts, front diff......