Thanks for the update! I recently fixed a similar problem on a friends 2008 Mazda 5 by replacing the valve body, but that was only a 2 hour job as the transmission pan is easily accessible. I really hope I never have to tackle this job on my S60!

 

My 208,000 mile V70 T5 had a nasty 2-3 flare when I bought it. $30 for a new B4 servo cover, 15 minutes of "training" and my tranny was shifting like a new one.

Then after 10,000 hard miles (including 3,000 pulling a 12x6x6 trailer!) I got another flare symptom. My assumption was that the problem was debris in the linear solenoids, so I resigned myself to pulling them out an rebuilding / cleaning them. Not a big deal, but I've been busy, so I just lived with the flare for a couple months, soft-pedaling the shift. Until I parked the car 10 days while I flew away on a vacation. When I came back, it shifted like new again. I can only guess that the residual magnetism drained away from the solenoid cores, and the debris floated away, or was washed away by the first burst of transmission fluid (changed about 10,000 miles ago, and still looking pristine despite the towing). I also added an external, magnetic filter in the tranny cooling line for good measure when I did the flush, and I believe that might have saved me having to do more work on my tranny (figuring it ALMOST had me pulling solenoids even with it!).

So once every blue moon, ignore that problem and it will go away. ;-)