Yes, that is what is sounds like.
Check the fluid of course, automatics work based on Fluid Pressure when you lose that you lose the "go", it is similar to the "magic smoke" that electronics run on, when the smoke gets out device quits working
.
The "bang" was probably a high pressure seal(or any seal) letting go, so no more pressure, or at least not enough.
'88 will have an A4LD transmission
A few good reads here:
http://www.therangerstation.com/tech_library/index-transmission-transfer-case.shtml
Good advice here:
"When having an A4LD rebuilt, there are a couple of things that you need to make sure of. First and foremost, do not let a shop do a soft parts fix only (clutches, servos, and bands). This will almost ensure that you will have another repair needed right after the 1-year warranty is out. Other things you want to have replaced are: forward one-way clutch (always), overdrive drum (stamped tin, replace if out of round or heat damaged), pump (Ford only, rebuilds are prone to failure), and the converter (get the better converter with the improved lock-up clutch and brazed fins). Also, get references from the shop and call the people. Just because they can rebuild TH350's and C4's does not mean they know what they are doing with overdrive trannies."
And as a heads up if you do the remove and replace yourself, you must install the torque converter on the transmission, and then rotate it while pushing in on it, so it can lock into the front pump, you should feel and hear 2 or 3 clicks as it slides in.
Torque converter should then be flush and a little in from the front edge of the bell housing, so bell housing can bolt tight to block without putting pressure on torque converter.
This is a lesson most learn the VERY HARD WAY on their first automatic R&R.
If you fail to do this you will break the front pump and have to completely disassemble transmission to replace it, and the worst part is you don't know you have goofed up until everything is back together and you start the engine and put it in gear......it won't move, and since transmission COULDN'T be the problem you spend hours trying to figure out what else could be wrong, lol, funny now, wasn't funny at the time.
They say we learn from our mistakes, well I must have a PhD in stupid by now.