Ultra Seven's transformation is the absolute best transformation of any Japanese superhero, bar-none.
Off the top of my head, runners-up include:
-Super Giant/Starman, who does the coolest WTF transformation (what looks like an angry ballet past any wall object, and emerging as Super Giant from the other side!)
-Hyouman (a P-Productions feline superhero from an unaired 1967 TV pilot), who had a Lon Chaney Jr. Wolf Man-style transformation
-Osamu Tezuka's Vampire (a teenager who becomes a cute but ferocious wolf)
-Masked Rider (his earlier transformations from the first 13 episodes)
-Silver Mask (the normal-sized one), which used an invisible man model fitted with Christmas lights, and a spooky "gooey" transition effect (which brought to mind the Black Hole Planet 3-Seijin from Godzilla Vs. Mechagodzilla)
-Riderman (putting on his helmet)
-Inazuman (the transformation from Gorou/Sanagiman/Inazuman is just awesome!)
-Masked Rider X (he's in costume, and half of his mask appears on his face before putting on the last part!)
-Megaloman (both his human-sized and giant-sized transformations)
-Dynaman, the first Super Sentai with a detailed transformation (once they transform, the heroes are in the spandex, and then their helmets appear!)
-Den-Ace (the different transformations were just hilarious!)
-Gransazer (awesome formation graphics!)
-Tomica Hero Rescue Force, nuff said.