Minecraft – How to change one Item Entity into another/different entity using commands

In the future, I recommend checking the wiki before posting a question here.

This is entirely possible using the execute command and target selector variables and arguments.

Executing commands at the player

The execute command executes commands on an entity. The @p selector selects a single player.
The name= argument only selects entities with a specific name.
So execute @p[name=<your username here>] ~ ~ ~ <command> will run <command> at your location.

testfor the nearest entity.

The @e selector finds entities of any type.
The c= argument selects a certain count. If this number is positive, it will select these in order from closest to furthest. c=1 will select the nearest entity.
The rm= argument selects only entities outside of a radius. If this is set to 0, it will select any entity that is not the executing entity.
So testfor @e[c=1,rm=0] would find the nearest entity to the executor of the command.

Putting it together

So, the first command will execute the second command at the player, meaning your finished command is

/execute @p[name=] ~ ~ ~ testfor @e[c=1,rm=0]

Closing comments/notes

As far as using testfor goes, I'd recommend against it. The scoreboard is almost always more useful, since you can use things like tag to mark the entity you found.

You're in luck, because I have a function that does exactly this. I'll explain what it does then give you the commands. I'm not sure eggs are a good idea, though, because there is a chance a baby chicken could spawn.

First, a scoreboard objective is created that tracks players who have thrown eggs. Players who have thrown an egg and have held an egg (determined by tag commands at the end of the function) summons an armor stand at the closest egg without a certain tag, then tags the egg so it doesn't happen again. The armor stand is constantly teleported to the closest egg, but when it does not detect a nearby egg then it is tagged. You can then execute all armor stands who have that tag to summon creepers or whatever you want to happen, then kill the armor stand.

This is the function. I converted it into 1.13 because it was originally in 1.12, and I changed it from snowballs to eggs (named "Grenade"). Because of lack of time I haven't tested it, but I see no reason why it shouldn't work. If it doesn't work, just let me know.

scoreboard objectives add grenade minecraft.used:minecraft.egg
execute as @a[scores={grenade=1..},tag=grenade] at @e[sort=nearest,limit=1,type=egg,tag=!grenade] run summon armor_stand ~ ~ ~ {Small:1b,NoGravity:1b,CustomName:"\"grenade\"",Marker:1b,Invisible:1b}
execute as @e[type=egg,tag=grenade] at @s run tp @e[type=armor_stand,name=grenade,limit=1,sort=nearest,distance=..2] @s
tag @e[type=armor_stand,name=grenade] add boom
execute as @e[type=egg,tag=grenade] at @s run tag @e[type=armor_stand,name=grenade,limit=1,sort=nearest] remove boom
execute as @e[type=armor_stand,tag=boom] at @s run summon creeper ~ ~ ~ {Fuse:0.0b,CustomName:"\"a grenade\""}
kill @e[type=armor_stand,tag=boom]
scoreboard players reset @a grenade
tag @a remove grenade
tag @a[nbt={SelectedItem:{id:"minecraft:egg",tag:{display:{Name:"\"Grenade\""}}}}] add grenade