Mark, on my TH350, the vacuum modulator sits on the RH side of the gearbox and is connected to the carb by a vacuum pipe. The varying vacuum signal moves the ported valve within the trans and thus alters the oil flow to the various parts of the valve body.
Steve,
Ah - makes sense, as that would effectively sense throttle position by the vacuum created. Our ZF box does not have that facility, as it is connected to a diesel, hence with no throttle plates we don't have no vacuum, so it uses the travel of the kickdown cable to perform the same function.
Mark