Thank you unisys12 for your kind replies everytime. Actually your replies are so helpful. When people post questions here, they really want replies.
Today, I did further test. Here is the update.
First I drove the car with the O/D off on free way at 85MPH. I monitor the TCC duty cycle. It was 100% lock. The slip is also very small, around 3-8RPM. The turbine speed is around 4100RPM.
Then I went to a highway, let the O/D on. I noticed that the TCC is locked from 35MPH to 50MPH although not 100%. The turbine speed is around 2000RPM. However it is unlocked once I reach beyond 50MPH, and the techometer jumped 200-300RPM. After a while, the failsafe mode reported. Once the tranny goes into failsafe mode, the TCC will never lock again.
Now I am 80% sure it is the pump problem. There must be excessive leaking inside the pump. When I drove the car with O/D off, the high TSS rpm may compensate the leaking. But when I drove with O/D on, the lower TSS rpm cannot compensate the leaking which may cause the line pressure drop and then cause excessive TCC slipping. The PCM monitors the excessive slipping and unlock the TCC, this further causes the failsafe mode and reports P0741 code.
There is 10% possiblity that something is stuck between the VB and TC. But this possiblity can be minimized by observing that the tranny slipping problem becomes worse after I replaced the TC and Mobil one ATF which has smaller size molecules. The small size molecule is easy to pass though but also causes big leaking problem. In this sense, I don't recommend people to use Mobil One ATF or engine oil for high millage cars.
Another 10% possiblity is that there is leaking between VB and TC. But this possibility can be also minimized by observing that the TCC locks well in third gear.
It's time for my next project. I need to drop the tranny again, and replace the pump.
A good scanner is really helpful to diagnose problems. I recently bought the Alex version OBD-II through group buy. It can monitor more than 170 signals. I really like it.