I would add 1 thing to that. If your character wears 2 one handed weapons (axe/sword/mace), you can also tmog some caster MH (caster sword or caster mace) as your OH, even if you cant wear "only-mainhand-weapon" as your OH. For example, "Greatsword of Horrid Dreams" from TBC expansion. Very long sword and you can apply its tmog to both of your one handed weapons, and wear them both ofc.
Ofc you pick class and race first. Note, that transmogs look different on each race. Note that they also look different on male and female characters.
Process is iterative. You might return to beginning and completely change your composition if you spot some interesting item during process of search.
But it is usually how i start it:
1. First thing you do is pick your base item, that you make your transmog around. It might be shoulders, helmet, weapons, tabard, shield. Basically most visible things. Or maybe something you noted and liked a lot.
2. If you are going for 2 or 3 + colors tmog, you start thinking on color scheme based on your first item pick. To get a hint, you can search for matching colors in the web, there are tons of designers pages. If ur first item is black, i would go for orange-yellow-black, or red-black, or white-black, etc. You got the idea.
3. Make sure, color transitions are non abrupt, or, if they are abrupt, make sure they look cool.
4. Dont go for a very detailed items. Like f.e. a lot of WOTLK plate shoulders have way too many details on them. Sure, there are some cool looking plate shoulders from WOTLK expansion, but they ruin total composition quite often.
5. Opposite to 4 - dont go for a VERY simple items. I often see some mono color tmogs, with very small and simple shoulders, for example. Trust me, it doesnt look that good. But what to do if its only shoulders available in that color? 2 variants: 1) search better, there are always something you could miss 2) go for 2+ colors, and pick less simple shoulders, that have more than 1 color.
6. Summary for 4 and 5 - keep balance of form, that suits your class and race. Dont overcomplicate things and dont go for very simple solutions.
7. Dont afraid to use tabards, there are some really sick ones that provide multiple color base.
8. Optional advice - try to avoid popular tmog items, especially if they dont look cool on your composition.
And last but probably most important - dont hurry. Save your current transmog for later. When you have some time - go check for some cool variants, maybe you will decide to change some of items to match different color scheme. etc.
I will keep list of tmog examples updated, because when im really bored, i tend to open wotlk dressing room and think on new compositions, just for fun.