700R4 transmissions will leak from the front seal when the cooler circuit is plugged or restricted...also if the cooler bypass valve is jammed with crud....
As far as flushing the convertor...if they did it correctly they would have been able to show you the metallic content from inside the convertor...the system I use has a pleated coffee filter style element that catches the contaminants for easy identification.
As an aside, any metal fragments in the filter from the flushing means the convertor MUST be cut open and repaired or replaced.
Perhaps they have a similar system...
As far as "burnt clutches"...700R4's, even after they have been "beefed up" all suffer from clutch burn ups, band failures, sun shell failures...great for trans shops...not so great for end clients.
Anyone looking for a decent auto trans...go straight to a 4L80e...yes you will need a trans controller...but you will have a much stronger drive train...