I do not recall if the shims were replaced? What goes wrong with them?
The following from:
http://www.forparts.com/ICdiscbrakeproblems10.05.htm
Disc brake squeal occurs due to a high-frequency vibration between the brake pad and rotor. Following correct pad mounting procedures can prevent the majority of brake squeal.
When installing the pads, it's important to use new mounting hardware. Most mounting hardware is made from soft materials like rubber or spring steel, which is designed to acoustically insulate the caliper from the mounting bracket and wheel spindle. These parts lose their soundproofing qualities as they age.
Second, the caliper guide pins or slides must be cleaned and lubricated with a recommended high-temperature brake part lubricant to prevent corrosion or sticking. Free-floating calipers relieve the tendency of pads to rub or bind against the brake rotor and, thus, reduce noise.
Pad shims must be reinstalled if they were originally used. Too often, these shims are discarded with the old pads while the brake tech unwittingly installs the new pads - minus the required shims.
To prevent shim loss, many manufacturers are now attaching adhesive shims to the backing plates of the new pads. Other pads require clip-on shims. It's important not to attach clip-on shims to the backing plate with an adhesive noise-silencing compound. Adhesive destroys the noise-insulating properties of the shim. In many cases, manufacturers actually recommend that these shims be lubricated with high-temperature silicone grease. Last, many pads are made with mounting tabs designed to hold the pad tightly in the caliper. Taking the time to crimp these tabs into the caliper will reduce the possibility of pad vibration and brake squeal.
Note: The 2002 FSM calls for replacing the shims. From other post, it appears early manuals didn't call for replacement. For the 2000 LC, a Toyota rear shim kit retails for $32.75 and wholesales for $26.20.