I had the same thing happen on a 347/C4 model a p/u and we installed a catch can and ran a bigger cooler and it solved the problem.
Shouldn't be getting fluid up that high in the case unless it's overfilled or aerating the oil severely. Fluid level should be just above the low line on a cold transmission. Much more than that and it'll puke. Mr. Paul has that covered already though. Haven't messed with a C4 lately but on the glides (at least mine, dads and my brothers) we fill it to the low line. Then drive it around to put some heat in it and check it again. Typically they'll be half inch higher on the stick after getting them to 140°. I checked mine once...from cold (75°) to 200° it went from the low line to above the high mark. And from experience I know C4's are notoriously finicky to fluid level. If it's a race car it needs a puke bottle anyway. Oil under the tires at 100+ is not fun (speaking from this weekend's experience) but mine wasn't ATF.
Was at Performance Auto a few weeks ago and asked the question about fluid coming out the vent on a friends Super Comp C4 and they said to just vent it as well.