2011 subaru legacy dashboard warning lights on due to transmission failure

I have a 2011 Subaru Legacy 2.51 Premium with an automatic CVT and
130,000 miles due to work. I have always taken it in for regular
maintenance, etc... The other night, the car slowed itself down automatic
for a very brief moment and then it returned to regular driving, but most of
the dashboard lights began flashing: The check engine light, the cruise
control light, and the CVT tansmission light. I drove the car to my mechanic
immediately the next day--6 miles from my house. The car drove perfectly
fine, but the light for the oil temperature rising went on and there was a bit
of a smell. My mechanic says I need a new transmission. He says the car
was emitting a burning smell and that the brake went on when he drove it.
He also said he could try flushing the transmission for $750.00 to see if that
worked, but he emphasized I might be throwing out money. This is my third
Subaru. The other two went 200,000 plus miles with no transmission
problems, but they were manuals. I knew I was going to  be needing a new
starter soon, so we are looking at $3,400 worth of repairs. Does this all
make sense? We are not car people by any means. We are thinking we
could fix the car and give it to our 20 year old who drives short distances,
but we are also worried about other repairs down the road. We have had
no problems with this car until now.