Can you transform after declaring blockers, but before dealing damage?
Yes, there is nothing that prevents you from Transforming at anytime you could cast Waxing Moon.

There are no special timing restrictions when transforming a double faced card. 

Lets break down your example step by step:


You attack with Duskwatch Recruiter, your opponent declares a 1/1 goblin token as a blocker.
After blockers are declared, but before combat damage is assigned, you cast Waxing Moon targeting Duskwatch Recruiter. Your opponent has no responses. 
Waxing Moon resolves, Duskwatch Recruiter transforms into Krallenhorde Howler and gains trample.
You proceed to damage step. The goblin assigns 1 damage to Krallenhorde Howler, Krallenhorde Howler assigns 1 damage to the goblin token and 2 damage trample over onto your opponent.


Final Result: Token Dies, Krallenhorde Howler survives, Opponent takes 2 damage.