Hi Ryan,
The only place where auto trans fluid comes into contact with the engine is inside the radiator, where the coolant passes through the radiator to be cooled. If the line inside the radiator were cracked, it would enter the coolant and contaminate it. But if burnt trans fluid is found coating the inside of the exhaust that would suggest to me that someone poured some of it down the carb while the engine was running. Not the smartest thing to do, but it will eventually burn off.
An engine built for drag isn't necessarily a bad thing, unless the cam they chose is too lopey and radical to run your power brakes. Other than that the engine internals and major engine parts like the block and heads would be similar to a street engine. Drag racers often build their engines to make power at a higher rpm, so if you have a single plane intake I would swap that out for a dual plane to get better low rpm torque. Full roller rockers are also louder that roller tip or stock rockers- I've had a few customers complain that full roller rockers were too noisy. A switch to roller tip rockers usually solves that issue.
Feel free to PM me if you have any engine questions- I've been building ponchos for over 22 years, so it's safe to say I do know them.
Geno