2001 Jeep Grand Cherokee P0320 and P0700 Codes: Transmission Jerking, Tach Fluctuations & Root Cause Analysis

Hi everyone, I'm experiencing a recurring issue with my 2001 Jeep Grand Cherokee 4x4 (Glide model), 4.7L V8, automatic transmission, with 85,656 miles on the odometer. While driving on highways at speeds between 50-70 mph, the vehicle experiences sudden jerks and 'slams'—the engine tachometer drops by 500–600 RPM, then partially recovers for 10–20 seconds before repeating. This has occurred twice, both times on interstate highways. The onboard diagnostic system shows two active codes: P0320 (Crankshaft Position Sensor Circuit Malfunction) and P0700 (Transmission Control Module - TCM - Fault Detected). The Malfunction Indicator Lamp (MIL) is activated. My hypothesis is that the mechanical stress from transmission downshifting during highway driving may have caused a temporary or intermittent failure in the crankshaft position sensor (CKPS), triggering P0320. Since P0700 indicates a fault within the TCM, I suspect either a failing transmission or related components are contributing to this issue. Notably, there are no misfire codes or other PCM-related errors present. During one incident today, after exiting the highway, I noticed severe idle instability—tachometer readings fluctuated from 299 RPM to over 1200 RPM, with moments of near-stall. After turning off the engine and restarting it approximately two minutes later, idle stabilized. The vehicle ran smoothly at speeds between 34–45 mph for the remainder of the trip without further issues. This clearly points to a transmission-related problem—possibly compounded by sensor or electronic faults. I'm seeking advice on how to diagnose and resolve this issue effectively. Any insights into whether a failing transmission or its components can cause the CKPS to misreport to the Powertrain Control Module (PCM)? What diagnostic steps should I take next? Thanks in advance.