#1 at anywhere near full throttle lockups drop out, most don't have the capability to handle full torque without risk of damage to the transmission.
So what? Many people never do that. Also, people often abuse their clutch when applying a lot of power.
#2 the biggest losses are from spinning and pumping the fluid around,
Small cars have CVTs now, completely different in design and also enabling the engine to remain in its power band more often. Traditional automatics typically have more speeds than manual gearboxes now, except for the heavy, complex, and expensive DSGs, which likewise permits greater efficiency.
we want to be in the most efficient operation for the engine while accelerating (full torque output), while cruising we want the lowest fuel burn.
Actually, peak efficiency is usually attained at about 80% of peak torque output.
That was truly the only reason I brought up the manual, It's losses are truly linear with torque all are equal.
Not at all. In fact, the losses increase more than linearly in both cases. The automatic is simply more complex. You have to take the lubricant into account in both cases. But there's also clutching to consider.
As well, in the near future KERS is going to become more common, with the TC replaced entirely with an electric motor which also replaces the alternator and the starter. It's getting cheaper and it's been proven out on all sizes of vehicle. The motor can also have magnetic lockup, which takes surprisingly little power to maintain but which won't wear out like a clutch.