I did an un-matched transitional year at ?AMC, and it wasn't too bad. There were times when "not belonging" to the service I was working for worked in my favor, and times when it did not. For instance, TY interns usually got the night float spot on surgery, which meant no call, very little responsibility, and lots of backup. They just didn't trust us, so they worked harder and treated us like med students. A well-written note seemed to blow their minds, and went a long way towards impressing the team. I'm not sure if this was a plus or a minus, but after showing basic competence, I was treated very well the rest of the month. Also, I got out of a LOT of stupid departmental meetings by playing the "I'm not one of your kind" card. So I had significantly more free time than categorical interns.
On the other hand, doing 5-6 months of medicine (counting MICU) was at times awful. This was the only service where I actually had overnight call (30 hour shifts), but it was only q5. I pulled a total of 23 nights of call my entire intern year. You can't beat that. However, I also had to interview for my civilian residency during intern year, which required me to travel. Because I wasn't theirs, the medicine department didn't give a flying **** whether I needed time off to interview, and refused me outright. I made it work by going on post-call days or my 1-in-7 off days, which was kind of painful, but I wasn't going to let them stall my career because they needed somebody to write notes. Also, on the occasion that something went wrong with a patient (diagnosis, treatment, etc), we all felt much less supported than the categorical interns. They seemed to have lots of freedom in decision-making, whereas we were often scrutinized and criticized for small things. Don't get me wrong, I'm not bitter, but I felt mostly like an anonymous warm body, and almost never like a valued part of the team. I wasn't offered the same degree counseling/explanation or made to feel capable in the event that I didn't completely understand the plan or the diagnosis. At least not from the higher-ups. My R2 and R3s were usually very helpful, especially when approached with a "I really want to figure this out so we can all work together" type of attitude. The LTCs, COLs, and chief residents didn't seem to give a damn, and would come down hard on you and make you feel like a fool for even trying to understand. It seemed different when it was one of their interns making a mistake, giving a ridiculous answer in rounds, or needing help. Such is life, I guess.
All that being said, I know of a few people who did an unmatched transitional year and again did not match that year, then went and did a GMO tour. All of them matched successfully after returning, one into a very competitive "lifestyle" specialty despite a TERRIBLE academic record. He was indeed treated like a misfit during intern year, but in his case it wasn't because he was a transitional year intern...
I think they should rename it. "Transitional" sounds like "rode in on short bus", or "needed a 5th year of med school". Maybe "non-categorical" or "preselect" or "general internship" would be less condescending.