2002 Pontiac Sunfire transmission speed sensor

I own a 2002 Pontiac Sunfire which is no longer under the 3 year bumper to bumper warranty but still has the rest of the 5 year, 100,000 km powertrain warranty. The other day the emissions light and traction control light came on. I took it to a local jobber shop, and their diagnostic computer came up with trouble code P0717 which indicated to them that the problem may lie in the transmission speed sensor (TSS). There was a TSB on the connection to the sensor, but they said they disconnected it and reconnected it and the problem didn't go away (now I'm wondering if replacing the connector would do something). However, they sent the car to a local transmission place which verified that the TSS was faulty. They also informed me that they would have to take out the whole transmission to do something about it, and while they're in there they might as well replace the other sensor (there are two TSSs) and the accompanying solenoids. The total cost with labour would be close to $1500.00.

Not sure if I'm explaining this right, but I believe I was told that the TSS controls the shifting of the vehicle which would make sense since the shifting has become very rough on the automatic transmission. I phoned GM and they told me that the sensors weren't covered under the powertrain warranty as they were electronic components and not mechanical. However, if I keep driving the car this way it will eventually become a mechanical problem won't it? Ugh!

There is barely 71000 kms (44000 miles) on it, and I have driven it with care since getting it brand new. My sister has the exact same car purchased at the exact same time with 20000 more kms on it and hasn't had a problem like this.

I guess my questions would be: is there a more economical way of fixing this? Am I being lied to? Should I take it to a dealer even though they are more expensive than jobber shops?

Ugh! I really need this around Christmas, don't I? Any advice would be appreciated...