Why won't the warranty cover a new transmission??? (archive)

If your car has had warranty work done on it that has been unsatisfactory, the warranty doesn't serve its purpose... If the transmission is shot, it should be replaced under the warranty...

This may be a bit long but please give me your input.
My car has been at a BMW dealership for over a month getting some warranty work done to it.
Before taking it in the car would do a hard shift from 1 to 2 gear. It was very unlike BMW and so we took it in to have it fixed. The car only had 133,000 KM on it and was well maintained before I bought it.
It had a GE Capital warranty (extended) and its a 93 750iL.
My main problem is how the car drives after having the transmission 'reconditioned'
The hard shift problem is still there (its even more apparent now), but now we also get a hard shift from 2 to 1 (slowing down). On top of that the car seems to leap when you put your foot on the pedal instead of taking off smoothly. The dealer said they would try to help us but nothing more might be done to the car.
I am very disheartened, the car drives fine on the freeway but its horrible on city streets. You can hear and feel it holding on to the last gear before shifting (feels like you will snap your neck)
It doesn�t make any sense to me. I don�t know what to do, the dealer said it wasn�t reconditioned at the dealership (it was outsourced) and that this type of shifting is 'normal' for this car (I don�t believe it).
What alternatives do I have?
I can�t afford the $4000 plus labor they want for a new transmission and I can�t keep on driving it with this terrible shifting, it�s very unlike BMW and feels as if the car will break down on me.

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