My dad has a 92 Honda Accord 4cyl, auto.

Recently, when shifted into drive, the transmission goes into high gear, and will not shift either up or down.  The car is drivable but will lug/bog pretty severely when first trying to get moving from being stopped.  He said the problem just appeared out of no where.  He shut it off one day after driving it and it was fine, then the next time he went to drive it and it began malfunctioning.  He said park, reverse, and neutral all function normally, but that the gear indicator light on the dash is flashing continuously.

Any ideas what could be causing this and how expensive it would be to fix?

You might be able to find some information here

Pull the back up fuse for 15 seconds, then put it back in.  if it starts in 1st it's got a bad TCM.  The D$ light on means it has a code stored, but when the TCM's go bad in this generation car they don't always display a code.