So I've largely ignored this feature, and decided to try it out during live recording a few days ago. Now I know I will never use that garbage again.
Each time you enter into "shot transition" mode it zooms in the image (seems like re-configuring the sensor) by about 10%, and you actually SEE that jump on tape/HDV out! Same happens if you exit the mode - so if you're recording live without interruptions, you get a pair of utterly horrible jumps while switching to shot transition mode. WTF, whatever possible niceness it has is completely ruined by this misfeature.
Hopefully a warning to those who've considered using it.
On the other hand, has anyone done anything cool/useful with shot transition?