The gear display in the tci most likely reads the pressure manifold switch assembly for actual gear it's in. With no fluid pressure the switches will send back a signal for 2nd which is also hydraulic limp mode.
On another note, I hope you changed out the EPC solenoid to a 94-03 style, opened the EPC vent port in the valve body, and blocked the line pressure accumulator port. Most don't know this, but 91-93 used a different pressure control system than 94+, you have to do more than just change the internal harness if you want a 91-93 to live with a 94+ style controller.