True. Whether or not the TCC allows it to lug depends on hwo aggressive the lockup programming is. In my Jeep's case, it's RPM dependent, not mph dependent, but it will let it lug down to 1050 rpm in OD with the TC locked.
Regarding Backtobasics' comment, my Jeep seems to do best around 45 - 55 mph, with only a slight drop up to 60 or down to 40. The TCC locks around 36 - 40 mph. For reference, I've got a 360 (although with a slightly different cam and more advanced timing than his), 46RE auto and 3.73s.
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Call me crazy, but I actually try for mpg with this Jeep:
Typical driving: Back in Rochester for school, driving is 60 - 70% city
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