I just replaced the VSS2 speed sensor on my 1998 legacy for the "no speedo, no cruise control, check engine light, & flashing ATF temp on start up". The old sensor was flagged by the OBD2 scanner. The old VSS2 speed sensor was obiously bad when removed, & I'm glad I replaced the sensor when I did. The VSS2 sensor was almost froze up & I can see how that could cause more wear problems in the tranny with the VSS2 drive gears.
Proir to changing the sensor I did check the VSS2 sensor connector. Because the sensors run about $100 new.
Everything is working again with the new sensor.
In 1999 Subaru made changes to the tranny & the VSS2 is now of a more dependable style sensor.