Overfilling is probably the most likely cause of foaming. Over the years, I've used many replacements to ATF in t-cases, including BG Synchro-Shift, which reduced the t-case temps of the Range Rover Borg-Warner full-times t-cases from the '89 models on up, tractor Trans Hydraulic Fluid (THF), which is fairly robust stuff but no more than about a 20 grade in viscosity (there are winter 15W20 and 20W20 grades too), and all the garden variety ATFs, as well as Amsoil or Mobil 1 syn.
Lately I have used RP Synchromax, acquired for tests in two trucks. Nothing to note as yet, though I did find that my old BW-1345 shifted better (It has been a somewhat recalcitrant shifter into low for the past 20 years).
In truth, the only major problems I've seen (and cured) personally were with the aforementioned Range Rover, viscous coupling t-cases. They literally COOKED the ATF, turning it dark in 15K miles and black and burnt-smelling in 30K(San Diego areas). You didn't want to see it at 60K. In the early '90s, the BG Synchro-Shift was the only suitable product I found with possibilities to improve the situation and when our Land Rover dealership switched to it for our regular customers, we were able to track the benefits. I had one RR rigged with a temp gauge and the oil knocked an honest 30 degrees off the oil temp vs Dex III ATF (we used a Mobil product IIRC), according to my vintage notes. You could easily leave it in past 30K. I imagine any of the newer MTF "Synchromesh" type fluids would be a good choice for a t-case if the viscosity was correct, but I think that the THF might be a real sleeper for chain drive t-cases. I will soon send some in from my big tractor for both a VOA and UOA to see what's in the TSC brand. I was running it in my '86 Ford for a couple of years but never UOA'ed it.
Overall, I think most t-cases are pretty easy to please.
