Weird Cruise Control Issue

[Mattchu60]

My 87' has had a strange Cruise Control issue for about a year now. Here is the symptom - when using Overdrive and cruise the cruise control will quit for a split second and then come back online. Its annoying because its like lifting off the gas and then punching it within a second (loses 2-3 mph and when it comes back on it goes to like 50-60% throttle to get back to the set speed).

happens in different situations, can happen on a flat road with engine hardly working, or going up a hill where its laboring some.

Here's the strange part - if I leave the trans in Drive (not overdrive) it does not happen ever. This leads to pretty high cruising RPM (almost 3k RPM on the interstate).

One thought I had was a vacuum issue since it does not appear to be an issue in Drive when the engine is running faster? Trans is a 700r4, doesnt seem like its a slipping trans issue to me.