Sensor Issues

The computer uses the sensors' readings to determine when to apply one clutch and overlap that application relative to releasing the previous clutch. That is what causes a nice crisp up-shift. When the computer doesn't know how fast the engine or the axle shaft are spinning, it has to guess at when to apply a clutch pack. It may go back to the factory default values it started with when the car was new. That is why there was slippage during the shift. There is always that slippage during every shift except when it is more excessive, you notice it. THAT is when the wear takes place. As long as there was no slippage when it was in any one gear, there should be nothing to worry about. Some manufacturers lock their transmissions in second gear to prevent the possibility of further damage. That allows you to drive slowly to a repair shop without needing a tow truck. Since yours is still shifting, it is safe to drive it but it's not a good idea to ignore getting it repaired.

I based my reply on your description of, "the tranny would slip a little bit from 1st to 2nd gear".

ALL automatic transmissions slip a tiny amount when one clutch pack releases and the next one engages. That is what makes it feel comfortable, but that is when the normal wear takes place. If you experienced a little extra slippage only during that shift from first to second gear, the same amount of wear took place that might occur in half a day's driving, in other words, not much.

The way people do serious damage is when the slippage occurs NOT during the shift but when it is locked in any one gear. THAT slippage is comparable to holding the clutch pedal down part way with a manual transmission. As long as that type of slippage occurs, the clutch plates are wearing away rapidly and are overheating. Overheating can also melt the rubber seals that hold the pressurized fluid in and help hold those clutch plates applied. Any extra slippage that you feel during an up-shift is not anywhere near enough to cause overheating or any other damage. From what you described, once the new sensor is installed, you won't even know there was a problem.