Yes, you'd need to create a MediaElement that represents a transition, and then integrate it with your composition. We've prototyped this, but don't have any working sample code to share.
What kinds of transitions are you looking to do?
I want to create a player which shows videos, images, swfs on TV Displays for a Digital Signage System. Im trying to create playlists with SMIL and load it with OSMF. I extended already the SMILPlugin for my porpose but there are some buggy things in the framework using it with flex for now.
For the first use I'm planing a wipe transition, when the next elements load to wipe it in. It looks better. But I dont know how to implement that.