Definitely check the CV joints, the symptoms sound pretty similar to when one of mine let go.
$4K is a reasonable price for a tow-it-in-and-drive-it-out transmission rebuild, done with all new parts by a full-time pro.
Just bringing the transmission in (doing the R&R yourself) can knock several hundred off the cost. Getting good used parts for the badly worn items can knock off a bunch more. Someone who does these rebuilds in his spare time, rather than as a full-time job, will knock more off the cost.
Doing the job yourself (and counting your labor as free) knocks yet more off the cost. But unless you have "adult supervision", it may be difficult to tell what parts are badly worn and which ones are still serviceable. Getting the Dr. Evil tranny rebuild video will show you what gets done and how, but even with pictures it can be a little difficult to tell what parts are OK and what are not.
A used transaxle will almost certainly work better than what you have--but it's unknown how long it will work. It will be much cheaper than any rebuild.
Your current trans may not be worthwhile to save, if things inside have gone wrong badly enough.
You may be able to substitute beer and BBQ for some, most, or even all of the labor for the above options. Especially if you have a heated garage to work in. I would seriously consider that option. Heck, one of the veterans of the Doc's PNW tranny clinic may be able to walk you through the process. Or perhaps do the procedure while you "supervise"...
--DD