Now that I think about it, we should forget about all of this transferability after the fact. I think the best response by an educated consumer is to first determine their FF goals (free first class intl travel vs. lots of free domestic trips, free high-end hotel rooms, etc) and then tailor a strategy to get where they need to go.

For example, since I like to go on last-minute domestic trips at least once a month, I try to maximize my free, unrestricted plane tickets while minimizing my hotel costs (I'll admit it - I'm a tightwad). To accomplish that, I:

1. Fly Southwest frequently
2. Get Southwest credits when renting cars
3. Use my Diners Club/Southwest Visa for expenses and transfer points into Southwest credits
4. Achieve a Companion Pass at 100+ credits every year
5. When I have to fly another airline, save up and launder 50,000 UA or AA miles -> 50,000 DC points -> 2 Southwest round-trip tickets (see #4)
6. For business trips, use Priceline (+eBay rebate) and/or discounted hotel gift certificates purchased on eBay (since it's my money, I value $$$ over hotel points)
7. For personal trips, use Priceline exclusively to stay at 3* and 4* hotels for $40-$80/night

Some people may prefer to save up for that $15,000 round-the-world First Class seat. I prefer to get value in smaller chunks more frequently.

If you stay focused on a strategy, you shouldn't feel the need to have to transfer miles and points all over the place at horrific discounts.