Overdrive problem, goes idle

So I FINALLY got my Xterra back from tranny rebuilding. But the Xterra still exhibits a problem just before the tranny broke down.

When driving on local streets, I leave O/D off. since there are some stretches of road where I can reach 50mph, the engine will rev at higher RPMs as it normally should.

Typically, if I let off the gas, the engine should compress (just like driving a manual) in 3rd gear. Any tap on the gas would give a fast response of power.

However, if I let off the gas now (crusing at 50mpg or higher) the needle will drop to idle. Tapping on the gas will give no response until my engine revs up to the matching speed of the tranny.

I'm hoping some members here, or even Cyclemut, can provide some insight.

Hope this explanation was clear.
Thanks.

bump.

any takers?
Thanks in advance

Cyclemut correct me if I'm wrong but that sounds about right. The computer in the truck should know the posision of the throttle. You let off the gas, it releases the converter allowing you to "free wheel". Just like pushing in the clutch on a manual.

Edit: Though the converter isn't locked up, you will still have some engine braking. It woudn't be as dramatic as if the converter had ramained locked.

I checked my almost new 04 after reading this post. Mine will drop to about 1600 rpm going down hill with the throttle closed at 65-70 in overdrive. I have 4:88 gears according to my door code.. Just an FYI