So since I have a day office job - gave car to my dad to take to shop. Wires were checked and were fine, re-tourqued the knock sensors yesterday. I got car back last night - went for quick test drive. In 1st gear car did not break up, hesitate, etc. Gradual acceleration pressure seemed fine, so did one test to wind through 1st gear and car ran like a champ (temporary cautious optimism). Tried again where I can get into 2nd gear, this time in 2nd gear, same symptoms of engine shut down. Got a flashing SES light for 20 seconds, then computer resets and is gone. (no scanner at home to see what code is)
Pulled back into garage at home, checked for any obvious signs for source of vacuum leak. Double checked the throttle body adaptor bolts. 2 were not overerly snug and I was able to torque down another 1/16 of a turn. Take car back out for test ride. Almost same results, this time at top of 1st gear, SES comes on and stays on. So done driving and back to the shop for scan.
Before a parked for the evening, I tried one test by just coasting at about 25-30 mph, then manually downshifting to 2nd and then tried to accelerate - experienced cycling hesitations almost immediately. Very odd it would not do that in 1st.
To answer Ricos question - the L67 suffered a spun bearing at 91k miles. The bearing was paper thin so must have been a long time issue. Part of the reason I switched to the L32 was hoping the factory rods and bearings would fare better.
So back to the drawing board - will plan to scan, check fuel pressure, etc. Will try to post engine bay picture some time in the next day or so. There was one extra vacuum port on the Gen 5 SC that did not exist on the Gen 3, so we just plugged it - not sure what it ran to in the L32 engine bay. Because this an inconsistent issue and a used jy engine, I'm betting something may have been damaged either in the yard or during transport (we used the L67 knock sensor because the L32s were damaged), so I'm thinking something else is sending incorrect or conflicting information to the ECM.