Updates:
Owner: ---
Comment #4 on issue 365 by [email protected]: transposing cues requires
explicit \transposition c'
http://code.google.com/p/lilypond/issues/detail?id=365
Comment 3 to this (closed and verified) issue is pointing out exactly issue 754.
The \transpose c g (as it works currently, causing the complaint of issue 754) changes the \transposition *interval*, such that the sounding pitches stay the same when the notated pitches are transposed.
