My previous car was a Volvo S40 automatic, and at anything other than high speed, lifting off the throttle caused the revs to drop to about 1200 - 1500 rpm. There was so little engine braking. From what I understand, for DFCO you need the engine braking to keep the revs above the threshold (as you say, about 2000 rpm). The only way I got appreciable lower speed engine braking was to drop down to D3.
I believe the torque converter didn't lock up until 50 mph in Drive.
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