Has anyone tried to transform a sales order with items to an item fulfillment via WF transform record? What are the requirements for this? created a SS for all lines that can be fulfiled to use as part of a scheduled WF...

I've used the transform action in scheduled and map/reduce scripts. There can be lots of details to check depending on your items and fulfillment processes. I imagine a workflow action would be similar but I haven't actually tried one to know.