While it is not necessarily common for an automatic transmission failure in Mustangs due to chewed up lip rings in forward gears, it is possible. Lip seals play an important role in sealing hydraulic pressure within an automatic transmission, as they prevent fluid from leaking past the piston and onto the friction material of the clutches and bands when a gear is engaged. If the lip seal is worn or damaged, it may allow fluid to bypass it, leading to inadequate pressure to the clutches and bands, and ultimately causing damage to the transmission. However, other factors such as poor maintenance or driving style can also contribute to transmission failure. Regular transmission fluid and filter changes, proper driving techniques and maintenance can help avoid potential problems. If you are experiencing issues with your Mustang's automatic transmission, it is recommended to consult a qualified mechanic for proper diagnosis and repair.