I wouldn't go so far as to say ALL phrog pilots will transition. As stated, most young Captains will be fine, and most Majors will have to find a new line of work in the Marine Corps. This isn't a huge surprise, since many field grade get one tour with a squadron anyway, and then never/rarely fly again.
Based on some MARADMINS that I'm too lazy to link to, as well as briefs from monitors, and watching a squadron transition, here's what I've observed:
When an HMM becomes a VMM, the pilots come equally from three sources.
1. 1/3 of the new VMM pilots come from the HMM, and don't have to move.
2. 1/3 of the new pilots are fresh out of flight school.
3. 1/3 of the new pilots are transition pilots from other squadrons.
Now, though I haven't seen this in writing anywhere, this suggests to me that when your squadron stands down for transition, one of three things will happen:
1. 1/3 of the pilots will stay put and transition.
2. 1/3 of the pilots will PCS to a B-billet, or lat move to a new MOS.
3. 1/3 of the pilots will go to MAG/MAW/MEF staff, and wait around for item 3 above.
The MARADMIN states that those with less than 10 years of service are the target group to transition, though those with up to 13 years will be considered. Generally, this is just into the young Major zone. So, if you're above this zone (mid-Major), you've likely already had your department head tour, and are still competitive for LtCol and command selection. Since there will continue to be fewer HMM squadrons to choose from for command, this may mean we'll see more H-46 pilots commanding HQ squadrons, flight school squadrons, etc. Those who don't pick up rank/command will probably find their way to a staff position, or a new line of work that involves moving back to VA.
So, what does this mean for a SNA about to select phrogs? That depends on which duty station you select to.
If you select any squadron out of Miramar, you will likely transition with the squadron (the lucky 1/3) during your first tour.
If you select to Okinawa, you'll probably be there long enough to transition with the squadron, though there's a chance that you'll be in the group that is PCS'ing to a B-Billet when the squadron stands down. In this case, you'll have to find a new line of work, or hope to be one of the incoming transition pilots to a new squadron later on.
If you select to Camp Pendleton, you'll probably be well into your B-billet by the time your squadron transitions.
All advice and predictions posted here assume that you'll be winged during FY10. If you wing later than that, your chances of being a young captain with remaining TOS (time-on-station) increases, and thus your chance of transitioning with the squadron increases.
This post was a mixture of facts, guesses, and assumptions. Anybody with a different point of view please feel free to chime in.