Before you replace the tranny, you should replace the transmission filter and fluid. Make sure to use ATF+4 for Chrysler ($5.00/qt, 10 Quarts). No guarantees, but is's worth a shot if it hasn't been done. My tranny started acting goofy at about 100k miles. the fluid was foamy on the dipstick, so I could tell it was breaking down. After replacing it, runs like new.
Overdrive is almost like another gear for your transmission. Say you have a four-speed w/ overdrive automatic transmission in your car. Once you get up into fourth gear, and if you're not trying to accelerate hard, the trans will kick into overdrive. It drops the engine's RPM's and saves gas. When you are traveling on the highway it help to conserve fuel.
The button does not switch from Overdrive to Automatic. The button just turns the overdrive off. Overdrive is not a separate drive system as your question implies. Normally you leave the car in overdrive mode. That way the transmission shifts into overdrive at highway speeds, thus saving fuel. If you are saying the transmission is stuck in overdrive and it will not disengage then seek out a A/T professional.
Certainly. It's been done for years before overdrive became a thing... it just means you'll turn higher RPMs at speed, and you'll want to drive slower if you're conscious about fuel consumption. I had no problems when I took my 87 Silverado with a Muncie 465 direct drive transmission on the highway.
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