Does the fluid level on a TH350 change between whether it's running or not?

I changed the filter and gasket, and filled it with about three quarts. I added more when I started it up, and when it was finally hot, I went throught the gears, and checked the level and added more until the fluid level reached the max line.

When I shut off the engine, the fluid level goes way up....

Is that normal????

Yes

You always want to check the transmission level while the car is running and on level ground.

You always want to check the transmission level while the car is running and on level ground.
And the oil is at operating temperature. Drive the car for 10-12 miles before checking.