by 
The Curious Bag
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<h4 class="dechead">On One Hand: The Benefits
A magnetic transmission drain plug is made to attract metallic particles. As machines wear out, tiny bits of metal are worn off of the moving components. These bits are picked up by the magnet on the plug instead of floating around in your vehicle's transmission oil where they can further wear down surfaces.
On the Other: The Downfalls
The magnetic plugs do in fact pull metal debris from the transmission oil, but you need to drain the transmission fluid in order to install them. They are more expensive than stock plugs, and once the magnet is full of gunk, it loses its benefits.
Bottom Line
Keeping your machine running optimally for a long time is the goal. If you're already changing the fluid, it can't hurt to throw a couple of bucks at a magnetic plug. Of course, you may be just as well off sticking a really strong little magnet (such as neodymium) on the outside of the stock plug.
Source:
"Break It in Right: How to Make Your New Car Last;" Robert Sikorsky; 1988
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