I presume... Devs don't want you to accidently transmute the garbage your going to wear For whatever reason they want you to waste resources enchanting them before transmutation The enchanting does not add enough stats to make a difference after transmutation, there is no point wasting rare aqua on gear you'll never equip
Dude... you upgrade them with the ingots that dropped during the event. Not elements. Chill out a bit, yo. But yes, I noticed this. I went to transmute them as soon as I finished upgrading, couldn't. I assume devs didn't want people to transmute before upgrading, and so made it temporarily unavailable.