The GM making situational, on-a-whim decisions can be seen as a fundamental rule of HârnMaster (all versions really). In this case, you can simply decide based on what fits the setting, story, and intended mood of your campaign as well as the other information you already have about the PC in question.

If you'd like more concrete guidelines, I recommend always choosing the option presented as "most common", "typical", etc. for PCs. NPCs with such a talent might have a less common version -- depending on what you have in mind for them.

In the case of Transmutation, I would rule that PCs with this talent can only change into a single animal form of a type that is common in the region. You can base the type on the PC's attribute scores (maybe allowing for a bear on high Strength, for a bird on high Agility, etc.), or you can create a table with a selection of different animals for a random roll. Alternatively, it might be a nice idea to allow the player to decide -- which gives them some narrative agency. Of course, it might be more interesting and more in the spirit of the rest of the HM character creation system to let fate decide and roll the dice. Personally, I would probably lean towards creating a table with a few entries and letting the player roll for their animal form (once, not every time they transmute ;)).

As for carrying over Intelligence and personality, I'd say yes. Anything else would just make the situation weird and cumbersome. One would have to determine how much of the character's previous intentions are still understood by the animal, and that could potentially open the flood gates for disruptive out-of-game discussions about animal intelligence and behavior.

I don't think it's necessary to restrict the animal to one with a similar height/weight ratio or body form: any kind of bird, a mouse, or even a beetle are possibilities.

It depends on your view of how magic/psionics work and interact with the (otherwise) natural world. If they are seen from the perspective of transdimensional/other-dimensional processes or forces, mass differences and many other limitations wouldn't be an issue. If you approach these phenomena more from a quantum entanglement perspective (which basically doesn't leave the four-dimensional world), I can see that you would prefer such physical limitations.

Personally, I prefer the transdimensional view as it keeps supernatural elements largely unpredictable on the whole. Shek-Pvar might know what to expect from their spells, but they don't understand a lot about the laws (if any) that govern them. Characters with psionic abilities would understand even less, of course. The other dimension(s) might be very alien to our perception, making scientific observations either very difficult or impossible.

As pvarism and psionics don't deal with entirely different phenomena but *probably* approach the same fundamental "force" from different directions (a trained, scientific one as opposed to an innate and intuitive ability), one might also compare the possibilities and limations of Pvaric spells to those of psionics. As an example, the Odivshe spell Figure of Aumos actually transforms the caster into water, an inorganic substance, and physically and chemically much more different from the caster's original composition than, say, a bird. ;)

Finally, the question whether a character with the ability to transform into a bird would also know how to fly can be answered quite convincingly as part of the character's biography: If the talent is dormant or the character has only recently become aware of it, they might not have learned how to fly yet. If, on the other hand, the character has been aware of the talent for years, it's very possible that they have taught themselves to do so (while in bird form, of course).

No problem, it's always fun to discuss Hârnic magic and psionics. And, of course, whatever seems right for the campaign to you -- the GM -- is the most important factor in such indeterminate areas of the rules. Apart from simulating the physical and paranormal laws of the game world, aspects like the campaign's intended mood, flair, and dramaturgy should also be considered. While HM is often very simulative and detailed, Robin Crossby was also wise enough to leave quite a number of questions up to the GM to answer for this very reason.