Except that you are transferring the damage instead of the creature receiving it. When event A occurs instead of event B, it means that event B did not occur. You could also think of it in terms of transferring 1 point of incoming damage, thus you are transferring something from A to B. Incoming damage.
Now, with this interpretation the question does come up whether to apply just the creature's Armor to the damage calculation or to apply both the creature's and the Mage's. It's not perfectly clear, but I believe that only the creature's would apply. The card implies that the transfer occurs when you are at the point of the creature actually receiving the damage, and thus after armor calculations in my opinion.
Perhaps the wording could have been better done. I believe they chose to use the word transfer rather than redirect to make it clear that it occurs after armor calculations, but now we do have confusion about whether it is ever applied to the creature (and the first still isn't completely clarified). Close one door and open another.
If the damage wasn't transferred until after it was applied to the creature though, then we could have the creature dying before the transfer could occur. Thus negating the transfer, even if the transfer could have potentially saved the creature's life. This is most certainly not how I've been playing the card, but I can't say with 100% accuracy that it is incorrect, just that it is not how I believe to be correct.
My interpretation is again thus:
You begin the Damage and Effects Step.
You calculate the damage to be received after armor and such.
Your Mage receives 1 point of this damage instead of the creature, and the creature receives the rest.
If the creature doesn't actually take any damage, then anything that triggers off of it taking damage (such as Rod of the Arcanum) does not trigger. It's exactly the same as if your damage was prevented by Armor. It doesn't matter that the creature would have taken damage, because it didn't.