TL;WR: Why are transmogrification limited. The only reason I know is that they are silly.
Whats wrong with transmogrifying a legendary? I never understood this. Or why you can't be bare chested for that matter. Why cant I have a bare chested wolf man? I remember a blue post saying it would seem rather silly if everyone in raid had thunderfury. Silly? You know your game is warcraft right? The cartoon one? It should not be serious. If I want to beat deathwing upside the head with a shovel and fish why not? They are in the game because at some point someone thought they were good jokes. And there are! Why not let players tell them again?
I tried rift again. By level 15 they game me a shovel to turn my staff into. It had a funny name too. I also bought an old style tux and went around as a Vegas magician on my mage. And that game is serious. No cartoons or happy DS endings. Now before you ask I am not currently playing any MMO. Sorry I know people are going to accuse me of that so I want it in the open.
Anyhow I was wondering if anyone could explain too me why they even needed restrictions.