Welcome to the site.
If running at a constant 3500 RPM is bad for the engine, I'm in deep do do with my SVX with the 5 MT. I run at an elevated RPM with it because of the lower gears. I would think that it would be much better on the car to run higher RPMs than let the transmission shift back and forth from one gear to another.
If the car is running at a higher RPM, wouldn't the transmission fluid be circulated at a higher rate and be cooled better than at lower RPMs?