Can I create a custom iMovie transition?
Your best bet is reverse engineering the existing Transitions if you investment in time costs less than the $50 for Motion which is the official tool for making custom transition effects.

Look in /Applications/iMovie.app/Contents/PlugIns/MediaProviders/MotionEffect.fxp/Contents/Resources/Templates.localized/Transitions.localized and the transition file is simply an xml file with the .motr file extension:

$ head Pan\ Down\ Slow.motr 
&lt;?xml version="1.0" encoding="UTF-8"?&gt;
&lt;!DOCTYPE ozxmlscene&gt;
&lt;ozml version="5.5"&gt;

&lt;displayversion&gt;5.0.5&lt;/displayversion&gt;

&lt;factory id="1" uuid="046e7c74fd734809885d35e99ac9eeb2"&gt;
    &lt;description&gt;Channel&lt;/description&gt;
    &lt;manufacturer&gt;Apple&lt;/manufacturer&gt;
    &lt;version&gt;1&lt;/version&gt;


Also, you could hire someone that has paid for Motion to make a trivial transition and test that it works for your needs. That wouldn't help if your true goal is to engineer how it works and understand the tool, though.