2005 chevy suburban z71 with 203,000 miles. Replaced engine and from day one the tranny cant find 2nd gear (will rev to the limit if I let it, need to let foot off gas for transmission to get out of first gear. Also, when on high way and press gas aggressively to pass the engine just revs and the truck goes no where.

The mechanic now says I need the Transmission rebuilt for $2k.

Is it possible that the mechanic did not hook up the replacement engine to the transmission correctly?

 

I think you should take it to another shop and have them check the connections between the engine and transmission. (Sorry not too familiar with the connections myself.).
This is a 4L60E. It’s an electronically controlled transmission. A scan tool can be used.

SD