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)
Actually this Durango cust said it shifted fine but the check eng lite would come on with the Gov codes. The Chrysler tech adviser told me the PCM looks at the downstream 02 and then looks at the trans gov press sensor next. He told me the sensor had a heater problem and it could spike voltage from a defective heater in the 02 into the Gov press sensor reading as this one kept setting the code for Gov Press Sensor volts High. And the 02 heater of course was fed 12 volts to it. But that's the way the tech adviser told me it set that code. I told him I don't know if I could have figured that one out without his help. I don't remember it being a Canada vehicle either. Ron
