Sometimes they turn out beautifully and sometimes they don't turn out, at all.
I use General's (an art pencil company) transfer pencil. If it's a small design and I don't have to move my iron around a lot on the tracing paper it comes out nice and neat. Other times, only parts are visible and I don't want to leave the iron on it for an extended periods of time (don't want to burn my paper and fabric). A lot of times I can just barely see the design and I then can go over that with the pencil just dark enough to to see it when I embroider it.
I did find that if your marks are dark enough, it will transfer better. But if you move the iron around too much and lift the paper a lot, it will smear your design, and depending on your fabric and if you can wash it out, you ruin that too.
Another way to get pass this is a light box, or a brightly lit window. Just slap the fabric over the design and trace away. You could then use a regular pencil, pressing lightly (I find that that washes off) or a water soluble marker. There are also dressmaker's pencils that wash out too.
Then there are times when you want to embroider on dark fabric, then the transfer pencil becomes useless then.
For these times, I find that the transfer pencil works really well on interfacing. I often iron it on that (use the very thin stuff, tear-away) and it is nice and clear. Or like I stated above, you can fill in the marks that are too light. With this you just tear it away from you finished piece. But be careful to not pull too hard and stretch out your stitches. This will take some time and patience (and can be a little messy).
I couldn't get it to transfer very well so I used the interfacing method.
It's pretty easy to do, just make sure that the fabric underneath is smooth.
It looks like I didn't use interfacing at all.