Saab 9-3,1999 acceleration hesitation and burning rubber

This little go-cart really gets-up and goes fast. It has a turbo that squeezes all possible power out of those 4 small cylinders. Worked fine for years…

However, twice this past week, during an attempted fast acceleration, it severely hesitates, almost jumps and jerks, almost as if it’s mis-firing but there is no change in the RPM’s (as indicated on the tach). Also, both times a strong smell of burning rubber permeates the interior like some belts, tires or ??? is burning.

I was immediately concerned about the transmission. I’ve checked the level of automatic transmission fluid and it’s fine. The car has been tuned around 1-1/2 yr ago.

What could be wrong or going wrong?

What rubber could be burning during this event because it’s not the tires?

How severe could this problem be?

Is the transmission going to suddenly explode?