Does SQL Server allow (make visible) DDL inside a transaction to the transaction prior to commit?
Generally speaking, no. SQL Server compiles the whole batch at the current scope before execution so referenced entities have to exist (statement-level recompilations may also happen later). The main exception is Deferred Name Resolution but that applies to tables, not columns:


  Deferred name resolution can only be used when you reference nonexistent table objects. All other objects must exist at the time the stored procedure is created. For example, when you reference an existing table in a stored procedure you cannot list nonexistent columns for that table.


Common workarounds involve dynamic code (as in Joe's answer), or separating the DML and DDL into separate batches.

For this specific case you could also write:

BEGIN TRANSACTION;

    ALTER TABLE dbo.foo
        ALTER COLUMN a varchar(11) NOT NULL
        WITH (ONLINE = ON);

    EXECUTE sys.sp_rename
        @objname = N'dbo.foo.a',
        @newname = N'b',
        @objtype = 'COLUMN';

COMMIT TRANSACTION;


You still will not be able to access the renamed column b in the same batch and scope, but it does get the job done.

With regard to SQL Server, there is a school of thought that says mixing DDL and DML in a transaction is not a great idea. There have been bugs in the past where doing this has resulted in incorrect logging, and an unrecoverable database. Nevertheless, people do it, especially with temporary tables. It can result in some quite hard-to-follow code.