UPDATE TIME!!
Pacbrake's tech support called me today and while we were hashing through things we figured it out. The newer brakes come with 2 tapped ports - one for an egt probe, one for a test port for a pressure gauge.
The one for my truck only has one port. My EGT probe was installed in that port, and the brake butterfly was closing on it. Tonight I pulled my probe out - it's bent about 45 degrees now - and plugged up the hole.
What a difference. When going into warmup mode before I could tell the brake was actuating, but it wasn't really doing much. Now it drops the RPMs significantly when it engages.
Also noted: Before when in 3rd with the brake on, I could drop it down into 2nd and the RPMs stayed high like the TC was locked up. With the brake working properly, the RPMs plummet back close to idle and it's clear that the TC isn't staying locked in 2nd.