Hey - for those that ever run into this situation, I've figured out a really simple stupid fix. I am an idiot for not thinking of it before.
Here's what you do:
Create a dummy copy of the object you are wanting to transform and make sure it's at the top of the display list of the parent your other object is shared with - but make the dummy object transparent. Then, instead of applying the TM to the real object, only apply it to the dummy object on top and create an ENTER_FRAME listener that basically copies the x, y, scaleX, scaleY, and rotation values of the dummy object to the actual object you are wanting to transform.
And there you go! Now you can do whatever masking magic you want without having to worry about mouse events getting blocked!