Should I lock out overdrive with an automatic?

I would definitely lock it out of OD.
Also fit a good quality transmission cooler.

I used to have a thermo fan fitted in front of the transmission cooler and use it when towing.
Connect it up thought your ignition system or Accessories so you don't leave it on.

Don't squib on the quality of the cooler as it will be the life of your transmission.

I think it also because the OD gear is the smallest gear (in diameter), so with a heavy load you are putting a lot of torque through a smaller gear, which can lead to failure.

I've also heard it said that it doesn't hurt the auto to run in OD as the auto shifts down as soon as the torque builds up anyhow. Wouldn't really know if this is a fact because I drive a manual

yep from my experience if you want to use overdrive then ditch the caravan.

overdrive is for easy open road lower revs cruising, not for towing, the 1:1 direct gear(one less than top gear) is for towing.
My 5c worth.

P'raps a call to the experts might be the go?

Overdrive is NOT designed for towing.

It depends on the vehicle , check your manual . If you don't believe the manual , listen to what your vehicle is telling you . Is it towing easily in top gear , will it go up minor hills without changing down ; you are probably OK . But if it struggles in top , wont accelerate , hunts between gears , you have a problem . In between , if you normally tow in second highest but get light on the Nullabor with a strong tail wind and you are cruising faster than usual , top may be OK . Then of course , there is a popular 4WD that has a ban on towing in overdrive even though it seems to go allright , and yes it will have a box failure .

Dont get confused between Overdrive and Torque converter lockup.

It is difficult for the torque converter to lockup to occur when in overdrive when towing. (Not all automatics are fitted with this feature). When it doesnt lock up slipage occurs, and that equals heat that need to be got rid of.

I have a automatic V8 landcruiser towing a 2.8tonne van. Fuel consumption is no different between travelling in overdrive, or locking the transmission in 4th and allowing the torque coverter to lock up, however the strain on the transmission and heat generated is much less.

RPM for the same speed is only about 200rpm higher as the lockup reduces the slippage by about 150rpm. Some call it the phantom 6th gear.

The cruise control also works much much better.

Thanks all for your helpful replies. There is so much to learn as a first time caravanner. I am taking your advice and my car is with the mechanic today getting a transmission cooler fitted. I will side with the majority view and lock out the overdrive when towing too. In the new year I will be shopping for a more powerful tug. Now I understand why all these years I have been following damned caravans travelling at 90k in a 110 zone!

First of all you don't say what kind of a car you have. Might have some bearing.

Secondly you don't say how big or heavy the van is.

Towing a light weight van with a V8 auto you'll have no problems just leaving it in D. However a heavy van with a smaller 6 cylinder will struggle and would be better off driven like a manual.

I have both a V8 Auto car and a V6 auto 4B and generally tow in D in both of these but when in hilly country I use the gears manually to stop it hunting. I believe if you're towing a load on a flat road then you're better off in D as the torque converter will then lock up and the transmission will run cooler. If it won't lock up or won't stay locked up for long periods of time (that is it hunts) then take it out of 4th to stop it hunting.
I see no value in running in third for long periods. All you do is chew up extra juice.
As for putting too much load on the gears, I say Bunkum! the Auto will down shift long before it strips a gear! The issue, as you rightly say is all about heat.