Here's a quick video showcasing transmogrification in Reaper of Souls for those who aren't in the Beta.
I didn't showcase any transmog from legendary to legendary (didn't want to spoil and also I didn't find too many samples to begin with :P), but it is possible. For instance, if you want to make a Hellrack look like a Manticore, you can do that. If you want to make a Zunimassa's Marrow look like a Inna's Vast Expanse, you can do that. You cannot, however, make a helm for a wizard look like a spirit stone (but you can make it look like a wizard hat). You cannot make your crusader's chest look like a DH's cloak (but you can make a DH's chest look like a cloak and vice versa).
Right now it seems like transmog prices are dirt cheap for non-legendary pieces (i.e. if you want to transmog something to look like a non-legendary item, it's a mere 500 gold). However, if you want to make an item look like a legendary (e.g. making your rare boots look like Ice Climbers), it's in the range of 500K gold per transmog.
By the way, you can dye legendary items now. Yay!