[Tom Goldman]

Several things come to mind on an AMC application that could cause this .
but the first thing that comes to mind is ,do you have the block separator plate installed ?
that plus a thicker than stock flex plate can cause the converter to ride that far back on the stator tube splines .
You still may have had adequate converter to pump clearance but just barely.
I'd also check the converter pilot for wear ,and /or block dowel tube not entering far enough into the trans . Some of the AMC 727's have a deep enough champfer that the tube does not actually enter the bore .