CO equals cast on. The pattern you linked to is similar to the one I linked and how I described you could adapt it, it's knit on circulars, but you can do it flat. Knit the ear flaps separately and put them on holders or a smaller needle. Cast on separately, then using the cast on yarn, knit the stitches of the first flap to the right needle. Then cast on more stitches and knit the other flap sts ending with the final stitches cast on. Then you can either knit in ribbing or garter stitch for a few rows, and switch to stockinette stitch. There's no `transition' exactly, you just knit the flap stitches between the cast on for the front and back edges. Oh, and you'll have to do a knit or cable caston, long tail won't work except for the first set of sts and then it won't match the others.
sue- knitting heretic