I think I know the answer but, when does the opposing character have to be in Johnny's line of fire for him to transform? Before of after a friendly is KOd?

IE: if

B = blaze
F = friendly
O = opposing

and they are lined up like BFO and O kills F will Blaze transform?

(I don't think he will)

Nope since O wasn't within LOF at the time of the KO with the F blocking the LOF to O.

He needs line of fire "when" the opposing character KO's your friendly, not afterward. So you need LoF before / during the kill, not after the figure is gone.

Is this the official ruling? Last I heard it was still under discussion.

I don't remember discussing it previously, but I agree with the answer given here.