I did all the research I could do on the topic and made the decision to go with the Toyota Type IV ATF going with the simplified drain and fill method. We have a local dealership here in town with plenty of the fluid readily available and since there is not too much money coming into the pockets to our friends from Toyota I thought that would give them my business; the parts guy was actually surprised that I was not inquiring about another recall item.
My father in law helped me in the process and it surely made things easier.
I bought 14 qts of ATF for $75 and a long neck funnel for $2.99 from Auto Zone (make sure you get one with a very small opening).
… See 2001 V70 2.4T ATF simple Drain and Fill… for the entire procedure …
In conclusion, the drain and fill method was very easy and straight forward. I am very satisfied with the results and after returning 3 qts back to the dealership the whole process cost me $63. As mentioned before, the original fluid was by no means burnt or in any way in bad shape, but certainly discolored. Now that I have done the ATF replacement, I will keep a good eye on the fluid level and looking for any leaks in the future. The shifting of the gears is very smooth (did not have any issues prior) and I will do this again in about 50,000 miles.