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So, in Torchlight II, the transmutation of any 3 gems will give you a random result. In my experience, that result is usually a gem of the same level as the gems you put in. If it's upgraded at all, it's to a chaos or iron gem of the same level (since Torchlight II considers those to be upgrades).
My primary focus when transmuting gems is to get those rare mana restore or hp restore gems. I don't try to get elemental gems from the transmuter because the RNG seems to favor chaos and iron gems, as you have noticed. Instead I hoard the elemental gems that previous characters have gathered, since the random drops in the field are often missing the very one I need. The game seems to prefer leaving your character with at least one weakness when it does its "random" drops.
It is my personal opinion that the supposed RNG (there is no such thing as a true RNG in the programming world) on Torchlight II is actually biased depending on the amount and types of damage you have been receiving, and the stats you have assigned to your character. I find that I usually receive more elemental gems when I play a character with a high focus stat, such as an Embermage.
Here is a good guide on gems in Torchlight II:
https://torchlight.fandom.com/wiki/Gems_(T2)
Also, here is a page about random number generators that you might find interesting:
https://softwareengineering.stackexchange.com/questions/124233/why-is-it-impossible-to-produce-truly-random-numbers
I think I saw somewhere that including higher level gems in the crafting can result in a gem with the highest level, but that seems semi-random.
I guess I'll start using these gems then. I get so so many of them, and I can't upgrade them into anything substantially stronger. Even the special gems have stronger versions and I've only found one gem that I think is truly unique.