What are the Transmuting formulas in Torchlight 2

Since Torchlight II will have completely new character classes, and none of the ones from Torchlight I will have a comingback, you will not be able to use old characters.

It is also stated in Torchlight II FAQ in Runic Games official Forum:

Will I be able to import my old characters?
No, the original characters will be in the game as NPCs, as will other NPCs of the Destroyer, Vanquisher, and Alchemist class types. Additionally, due to various changes in gamplay systems the old character files will not be able to be imported as-is, as detailed below:

Along with the story the game will use a new wardrobing system opposed to the one in Torchlight. As a result they did not reuse the Torchlight character assets.

There are 4 difficulties: Casual, Normal, Veteran, and Elite, and in addition a hardcore mode. Can be seen on this video at around 2:50.

As the official site states:

Since there are no real benefits for picking hard difficulties other than fun (you don’t get better loot), you are free to play the game how you most enjoy. If you like being overpowered… you can play normal mode. If you like a serious challenge, play elite (which is much harder than very hard in TL 1). If even Elite is not enough for you, you will be able to easily download a difficulty mod and challenge yourself further.

The loot and drop rates don't change, only monster health and damage change.

And there is always the option to create your own difficulties with mods, to suite your specific desires.