FYI, pushing the overdrive button generally turns the overdrive
off -- it's on by default. If your transmission has 4 gears plus reverse, pushing the overdrive button just makes it stop using 4th gear. The normal reason to turn it off is if you're hauling a heavy load and don't want to strain the engine, or if you're going down a steep hill and want to use engine braking, or something like that. Turning it off will hurt your fuel economy a little, but not much else.
(The word "overdrive," by the way, refers to the fact that in that high gear, your wheels are turning at a higher RPM than the engine. In some cars, the highest gear might not count as an overdrive because the gearing is still less than a 1:1 ratio. Other cars, like recent Corvettes, are geared so high that the
two highest gears are overdrives.)
I don't know much about automatic transmissions, but I do know that they are more complicated than manual ones (with hydraulic valve bodies and such) and are thus often both more failure-prone and more expensive to replace than a manual transmission for the same vehicle. I don't know if that's true specifically for Dodge Dakota transmissions, but if it does turn out to be a major repair (such as a valve body replacement) it might be worth considering
swapping in a manual transmission instead.
I also suggest you
read this so you understand what the mechanic is telling you when he gives you the diagnosis.