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Playing v2.6.0, ruleset civ2civ3, my engineers are showing Transform to Hills greyed out. I did this playing Default ruleset.

Might it be an issue with the surrounding tiles (1xhills, 3xplains, 2xmountains)? That it already has mine/road on it?

Update: Transform to plains is not working on a tundra tile, also.

Do you know Fusion Power?

From civ2civ3 ruleset Engineers help:

With knowledge of Fusion Power, Engineers may also perform more radical terrain transformations than Workers, Settlers, or Migrants, with the "transform" order.