Toyota and our ATF Fluid Flush machine manufacturer MOC both specify to not machine flush WS ATF "Sealed" transmissions, an inline fluid exchange is okay for T-IV ATF "non-sealed" transmissions (that have been serviced regularly) and is done regularly at dealerships in lieu of drain and fill (or should be, but sometimes guys get lazy.) That's your "Gospel," both the vehicle manufacturer and the manufacturer of the tool both tell you how and what applications to flush the transmissions with a machine.
As was pointed out there are many different types of machines out there that do ATF flushing, some with solvents, others with reverse flow, ect ect; the most common is really a "fluid exchanger" that is hooked up via the cooler lines inline with the flow of the transmission fluid. It was brought up that some members don't understand why the fluid flushing can damage a transmission so allow me to expand on this.
To properly explain this lets go over a rough idea of how an automatic transmission works and the jobs ATF has in that application. First off, inside your automatic transmission is a combination of planetary gearsets, bands, clutch packs, and hydraulic valves and solenoids all run by the automatic transmission fluid. At the most basic level of operation, the automatic transmission works off of friction, just like a manual clutch or brake system. All the wizardry inside is to make the clutch packs and bands turn the gearsets which power the wheels.
ATF is in my opinion the hardest working fluid in a vehicle, it has to manage multiple jobs all at once; it needs to be a;
-Hydraulic fluid (Actuating solenoids and valves, engaging clutch packs and bands, ect ect.)
-A friction modifier (enhancing the grip of the clutch materials)
-A coolant (all that friction generates a lot of heat)
-A lubricant (All those gears, valves, solenoids, and clutches need to be lubricated)
-A cleaning agent (The detergents and additives in the fluid help keep the automatic transmission clean inside and the flow of the fluid helps remove particles.)
As your transmission does its job those clutch packs wear away both the clutch material and metal discs they press against at an almost microscopic level, just like your brakes or clutch lose material in the form of dust. The ATF pulls all these itty bitty particles of debris away from the internal workings of the transmission and suspends it in the fluid and hopefully the larger particles will get picked up in the filter. Now lets fast forward say, 100,000miles in the life of the vehicle and that fluid has never been changed. All that dust and debris will form little piles all through out the system, mostly at sharp bends and areas where flow is disrupted. These piles over time become baked on for the most part don't often cause trouble (unless they restrict the fluid flow severely.)
Now Joe Shmo the hapless car owner gets talked into finally taking care of his car and he hocks up the cash for a fancy machine flush. Unfortunately for Joe Shmo, his negligence combined with the shock of brand new fluid with fresh detergents and additives and the machine's efficiency has popped loose those piles of debris like magic. Which is what we want right? Yes and no, we want all that crud out of the system... in itty bitty form, now we have these chunks of dust and metallic particles clogging up the system and/or getting munched up in the internal parts possibly causing it to wear even faster! The basic idea is, that the longer a transmission has gone without a fluid change, the more likely it is that flushing new fluid (machine or otherwise) will cause all that crap to become loose and now clog up the system like a fat man's heart on McDonalds.
One last thing to mention is that WS ATF is NOT "Lifetime Fluid," Toyota and other manufacturers have been pushing this line of BS for years. As we went over earlier, ATF is a seriously hard working fluid and those detergents, additives, and the integrity of the fluid DO Degrade over time. Refer to your owner's manual to see the little discrepencey in ATF maintenance. Toyota says under "severe" conditions that the fluid is to be changed at 60k and replaced every 30k afterwards. That being said under normal driving conditions I would say 90-100k is a good interval for WS Fluid from my experience. Its not "lifetime" but it is a long life ATF compared to say T-IV where we said 30k all day long.