I had this happen like 10 years ago. It seems to be a really obscure problem.
The way I understand it, the downstream also reports a warmed up cat, but if it doesn't, and the coolant sensor says warm, then the computer on my 99 Dakota would hold the trans in first gear. I did like you-
replaced the sensor and solenoid, but still no upshift. I then changed the downstream and everything was fine.

We had another member here with a Ram that did the same thing. Your Durango is the first I've heard that shifted normal.

By chance was it Canada spec? They have a convertor/sensor setup nothing like the 48 state/Cali units. (My Dakota is canada spec)