Before you start spending the big bucks for transmission diagnostics or repairs, try checking the cheap/easy things. Like balancing the tires. At what speed does it start vibrating noticably? Seems to me that if it were a tranny/flywheel thing, then the vibration would be related to engine rpms, not speed. Are there any noises when its vibrating (humming, buzzing, etc)? The most common cause of car vibration is out of balance tires. Spend $50 or find a freind to balance them for you. Also, how long has the car been sitting? There is always the chance that your tires are flat-spotting and getting out of round. In which case new rubber may be needed and a balance wont help.
Also, its an old car, has the starter ever been replaced? how long ago. There is a chance that a $60 starter will solve the grinding problems. If the drive gear on the starter isn't enaging all the way or is fubared, it will grind. The car will still start, but youll start to take out the teeth on your flywheel. Pull your starter out of the car, take a look at the teeth and get a general idea of the condition of your starter.
I guess it just seems like such a stretch to me to go from "grinding and vibrating" to toqrue converter bending the flywheel. Check the simple, easy, cheapo stuff first.
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