This Law is about the most problematic of them all for me.
I'm not sure if it's mentioned explicitly, but in general the Laws seem to fit with the real world Wiccan Rede. "An' it harm none, do what thou will."
For the rest of the Laws, the harm is not only pretty obvious, but we have explicit examples from the books. We've seen what happens when you twist the will of a mortal, or what can happen when you reach beyond the Outer Gates.
This Law seems murkier to me. In Fool Moon Harry says that the harm is destruction of the personality. Bob corrects him though, saying that most personalities can survive a transformation. So how do you define harm, and if there is no harm, is it really Black Magic?
Going back to an earlier question about "accidental changes"...I don't like the idea of a spell that was not supposed to transform anyone accidentally transforming them. That has no interest for me. But we have seen that young magicians who are learning about their powers (and may be ignorant about the laws) have a kind of wish fulfillment thing going for them. So their "enemies" (school rivals, not ravening psychopaths. Usually) might find themselves with tails or weird skin diseases. Or they may feel bad that their pudgy best friend gets picked on all the time, so that friend wakes up with a Bowflex body. Or their significant other (boy or girl) wakes up to other, ahem, blessings.
Along those later lines, I can see adult wizards being paid truckloads of money for those exact same services. If the subject truly wants it, is it Black Magic? Maybe, maybe not. Good intentions didn't really help in Proven Guilty (other than getting the Doom instead of the Sword).
And didn't Harry transform him and Susan into wind (temporarily) in Storm Front?
So confusing.