Automatic transmissions tend to self destruct when a problem begins. They will start slipping or acting poorly on a certain shift which causes slip... which makes LOTS of heat. The heat then makes the issue worse and causes wear at other parts. If the issue can be identified and fixed very early, occasionally a rebuild isn't required, but like shop stated, this transmission needs a rebuild.
I will say what the shop said about changing the fluid is correct... new fluid can cause the issue to get worse due to the fresh detergents loosening whatever you have in the trans.
I am sure that isn't what you wanted to hear, but a rebuild will be required to use that transmission. Another option would be to install a used transmission. Be aware that a lot of shops won't install a used transmission because they don't want their name associated with the unknown parts. If you have the experience and tools, you could swap the transmissions yourself, but I am guessing this isn't the case.