Certainly possible. I wonder if this was just an "up-sell", since there was apparently no reason to flush the transmission. A 'drop and fill' would have been sufficient it seems.
It's hard to say what caused what though, given that the transmission ran so low on fluid. The primary enemy of transmission is heat, and fluid cools the unit, so it seems plausible that overheating could also cause this condition.
Last of all, this is a 20 year old car, so I presume the transmission has a lot of miles on it---and transmission do have a natural life span after all.