You can drive it wherever, however in 3rd.  It won't hurt anything, but you'll be turning more RPM.  With first generation, and even second generation overdrive autos it was common advice not to tow in OD for fear of burning up the trans.  Typically the 3-4 clutch packs were not especially strong and you would risk wearing them out. 

When you are towing on flat ground at highway speed the load is not changing, but the load itself is putting considerably more stress on components that were initially not designed to take that stress.  OD was initially seen as a way to meet CAFE standards, especially with trucks.  The clutch packs just weren't up to towing.  Shifting in and out slips the clutches and can create wear as well, but if you look at the number of plates in the 3/4 pack in those early 4 speeds compared to the other packs its usually half.  I can also tell you that in a Diesel application it doesn't shift out of OD until you are at about 70% throttle.  Diesels make the most power under the most load and actually pull the top gear the hardest. 

Bottom line, the AOD, E4OD, and their derivatives just weren't up to towing in OD.  That was corrected when they went to the 5R110 and later generation 5 and 6 speed autos.  They've also added a Tow/Haul feature to reduce the wear on brakes by using compression braking, as well as helping with acceleration by holding gears longer.