I finally did transmission fluid change. I first open the drain plug, and then use the upper hose to the radiator. I was going to pour in exactly as much as that drained out. Unfortunately, this strategy failed because I spilled the fluid all over. So, I had to reply on dip stick reading.

I see there are hot side and cold side.
My readings are not consistent not just from different sides but also from the same hot side. When is the best time to read dip stick, while engine running, just after engine turned off, or after completely cooled down?

 

I'm pretty sure you wanna do it cold. You'll get the most accurate reading that way.

 

In that case, mine is 1/8 inch above the full line. How bad this is?

 

I would suggest draining a little.

 

I am not sure if there is a specific method for your model year, but my 2004 has two temperature ranges on the dip stick. I believe you should read it hot, after running through all the selector settings. A good reference would be the IPUSA site. They have a flush kit for this car and you can download the pdf instructions.

BTW.... I vote for a complete flush and exchange of fluid as opposed to drain and fill. I've done it twice on the V70 and probably twenty times on 940's. Never took more than thirty minutes.

 

I have currently about 95,000 miles on it and the previous owner had the transmission serviced around 45,000 by BG. When I drained the fluid out, it was thick and dark redish or brownish. This time I used 14 QTs of Valvoline. I immediately felt a huge difference. The ride was incredibly smooth.
I wish I could do complete flush but I have to do it myself within limited budget.
Anyway, my fluid level was like 1/8" higher than the max on the cold side. It felt very smooth but had the slight not-fully-confident feel when shifting. Now, I drained out about 1/4 or 1/5 quart, and the cold fluid level is right at the max line. It has a little bit of jerkiness or harsh engagement feel, but not as strong as before the fluid change. When I read the dipstick while engine running, strangely there is no oil on it. After 20 min or so, it is at the min on hot side. But after an hour or so, it is below the min line on hot side.
My guess is that I need a few more drops to make it smoother without overfilling it, but I don't want to buy another bottle of fluid. So, I am settle for this now.